8. The term efficient frontier refers to the set of portfolios which a. Yield the greatest return for a given level of risk b. Involve the least risk for a given level of return c. Both a. and b. above d Neither a or b above 9. Portfolios that lie on the portion of the efficient frontier below the minimum-variance portfolio a Add nothing to the investment opportunity set-that is, they are dominated by portfolios above the minimumvariance portfolio b. Are useful in implementing sophisticated hedging techniques c. Are the selection set for the optimal risky porffolio d. Are the ones rational risk averse investors choose 10. Which one of the following portfolios cannot lie on the efficient fronter as described by Markowitz? a. Only portfolio W cannot lie on the efficient frontier b. Only portfolio X cannot lie on the efficient frontier c. Only portfolio Y cannot lie on the efficient frontier d. Only portfolio Z cannot lie on the efficient frontier e. Cannot be determined from the information given 11. Diversification is most effective when security returns are a. high b. negatively correlated c. positively correlated d. uncorrelated 12. As diversification increases, the total variance of a portfolio approaches: a. 0 b. 1 . c. the variance of the market portfolio. d. infinity. e. None of the options are correct. 13. Consider an investment opportunity set formed with two securities that are perfectly negatively correlated. The global-minimum variance portfolio has a standard deviation that is always a. greater than zero. b. equal to zero c. equal to the sum of the securities' standard deviations. d. equal to 1. e. high 14. Correlation coefficients between several pairs of stocks are as follows: Corr(A,B)=0.85;Corr(A,C)=0.60; Corr(A,D)=0.45. Each stock has an expected return of 8% and a standard deviation of 20%. If your entire portfolio is now composed of stock A and you can add some of only one stock to your portfolio, would you choose (assuming short sales are not allowed): a. B b. C c. D d. Need more data