Figure 1. 2 in the text plots the mean-variance parabola of Markowitz. Why is the parabola curved in shape? What is the minimum variance portfolio? What is the efficient frontier? Are some portfolios on the parabola inefficient?

Figure 1.2

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Average returns X RG 0 Efficient frontier P12-1 P12 = -1 G Inefficient, minimum variance portfolios Security 1 (R,0) P12 = 1 Security 2 (R,0) Standard deviation of returns, or a