Refer to the following figure: CML B Linear Efficient Frontier E(R3) 19 M E(RX) 14 SGP500 P E(R) Curved Efficient Frontier E(R)= E(RO @ R, 4 Curved Efficient Frontier offers many choices of optimal portfolios Only the upward portion of the curved Efficient Frontier is efficient. This curved frontier is obtained by mixing risky securities and a risk free security available in the market. Portfolio B and Portfolio P have the same standard deviation of their returns. However, Portfolio P is more efficient than Portfolio B, because it les on the Curved Efficient frontier Portfolio C can be made by mixing a risk free asset such as US T-bill offering a return Re and a tangency portfolio M that holds all the risky securities in some proportion. This portfolio Con the Capital Market Line (CML) will be more efficient than a portfolio Q of equal risk that lies on the Curved Efficent Frontier Portfolio C is a borrowing portfolio Both Cand above