Question

How does efficient frontier analysis differ from other forms of complex risk assessment techniques?

Answer 1

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How does efficient frontier analysis (EFA) differ from other forms of complex risk assessment techniques? Efficient frontier analysis given for any risk it will give the highest level of expected outcome regardless of any combination of assets could be. It will analyze risk vs return on investment portfolio.❤️

Answer 2

The effecient frontier is a portfolio analysis term to measure risk versus return for a portfolio of investments. While the financial forecasts for each specific asset are important to the analysis, the final results are necessary for effective portfolio structuring. The key to an efficient frontier is the highest return for any given risk level in a portfolio. This can be extended simultaneously to both physical properties and financial instruments.

Explanation:

• Some of the main problems addressed in the portfolio management is the selection of risk management approaches to help investment decision making. The factor that contributes to the development and dissemination of the methods of risk management is the fact after the emergence of this theory, the risk of portfolios of financial institutions started to be increasingly measured using the portfolio selection model of Markowitz. Presemtly, this problem has been solved, since his designation used linear programming
• The efficient frontier analysis  can be described as an image of a series of portfolios that provide the maximum return for each risk level or a minimal risk for any return level. Moreover, in terms of portfolio management for financial instruments, this calculation provides valuable information in that it takes into account the potential loss of the investor and can be used as a complex risk assessment