Question
Based on your information, you estimate that your clients have a risk tolerance where they are willing to endure up to 12 percent annual volatility
Based on your information, you estimate that your clients have a risk tolerance where they are willing to endure up to 12 percent annual volatility and they have a required return of 6 percent per year to meet their goals. Based on this information, which of the following is/are true?
I. The best portfolio will have an expected return of 10 percent and expected volatility of 12 percent.
II. The best portfolio will have an expected return of 9 percent and expected volatility of 6 percent.
III. The best portfolio is the lower-risk, lower-return portfolio with expected volatility that does not exceed the clients' risk tolerance level and has an expected return that meets or exceeds the clients' required return.
Question 4 options: 1) I only 2) III only 3) I and III 4) II and III
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