Question

With the introduction of risk-free borrowing and lending, the new efficient frontier will be an arc that is higher than the old markowitz arc representing the efficient frontier. True false

Answer 1

Explanation:

The efficient frontier is the set of optimal portfolios that offer the highest expected return for a defined level of risk or the lowest risk for a given level of expected return. Portfolios that lie below the efficient frontier are sub-optimal because they do not provide enough return for the level of risk. Portfolios that cluster to the right of the efficient frontier are sub-optimal because they have a higher level of risk for the defined rate of return.

Answer 2

Answer:

Above answer is correct