The optimal risky portfollo can be identified by finding:

The minimum$-$variance point on the efficient frontier

The maximum$-$return point on the efficient frontier and the minimum$-$variance point on the efficient frontier

The tangency point of the capital market line and the efficient frontier

The line with the steepest slope that connects the risk$-$free rate to the efficient frontier

Multiple Choice

$1$ and $2$ only

$2$ and $3$ only

$3$ and $4$ only

$1$ and $4$ only