Economics Stock Market Questions
The efficient frontier refers to the set of optimal portfolios that offer the highest expected return for a given level of risk, or the lowest level of risk for a given expected return. It represents the combination of assets that provides the maximum possible return for a given level of risk, or the minimum possible risk for a given level of return. The efficient frontier is derived through the process of portfolio optimization, which involves analyzing the risk and return characteristics of different asset combinations to find the most efficient allocation.