Question

Distinguish between efficient portfolio and feasible portfolio

Answer 1

There cannot be two similar efficient portfolios but can be many similar feasible portfolios.. If expected returns are not met for a particular risk level, or the risk required to attain a specific level of return is too high, the portfolio is said to be inefficient.

Answer 2

The difference between efficient and feasible portfolios are as follows-

• A feasible portfolio is one that can be made by the provided assets.
• On the other hand, an efficient portfolio follows the Markowitz rule and lies on the frontier.
• A feasible portfolio nullifies the risks, whereas, an efficient portfolio only reduces the risk to the lowest level.
• A feasible portfolio satisfies the investors as much as it is possible. An efficient portfolio only satisfies up to a certain level.

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