Consider two portfolios. Portfolio A has an expected return of l0% and volatility of 8%. Portfolio B has an expected return of 9% and volatility of 7%. The interest rate on a risk-free investment is 5%. Which of the two risky portfolios is not on the efficient frontier? (Hint: Use the two-fund theorem.)

How is the two-fund theorem useful in practical portfolio theory applications? What is the relationship between the two-fund theorem and the Sharpe-maximizing portfolio?