Question: Q1. a. Select the keywords which make the following statement correct. The portfolio is referred to as efficient if it has the highest/lowest level of

Q1. a. Select the keywords which make the following statement correct. The portfolio is referred to as "efficient" if it has the highest/lowest level of the risk for the expected level of return or if it has the highest/lowest level of return for its level of risk. (2 marks) Use the diagram below for both sub-questions b and c EFFICIENT FRONTIER DIAGRAM Efficient Frontier O A B Return (u) Risk (o) b. In the diagram below, what are the characteristics of the portfolio mix which lies along the efficient frontier (e.g. production mix in position B in the diagram)? (4 marks) C. Do portfolios exist above the efficient frontier like in position A in the diagram? Why

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