What is an Efficient Frontier?
The effective boundary is a collection of various securities that can obtain the maximum return with the minimum risk under the constraint of return-risk. as the picture shows. In the figure, the horizontal coordinate represents risk, the vertical coordinate represents return, and any point in the shadow represents a feasible portfolio security. The risk-return combination provided by each combination of securities can be obtained through the corresponding two points on the horizontal and vertical coordinates. Be sure. Obviously, the risk-reward portfolio corresponding to the various portfolios represented by the points on the SBAT curve in the figure is far superior to the portfolios represented by the other points in the shaded part, because they can achieve the maximum with the least risk In other words, in order to obtain a certain benefit, the risk is the smallest (such as the comparison of B and O), and the greatest risk is the greatest benefit (such as the comparison of A and O). The SBAT curve represents the effective boundary of securities investment. [1]
Effective boundary
discuss
- Chinese name
- Effective boundary
- Foreign name
- efficient frontier
- The effective boundary is a collection of various securities that can obtain the maximum return with the minimum risk under the constraint of return-risk. as the picture shows. In the figure, the horizontal coordinate represents risk, the vertical coordinate represents return, and any point in the shadow represents a feasible portfolio security. The risk-return combination provided by each combination of securities can be obtained through the corresponding two points on the horizontal and vertical coordinates. Be sure. Obviously, the risk-reward portfolio corresponding to the various portfolios represented by the points on the SBAT curve in the figure is far superior to the portfolios represented by the other points in the shaded part, because they can achieve the maximum with the least risk In other words, in order to obtain a certain benefit, the risk is the smallest (such as the comparison of B and O), and the greatest risk is the greatest benefit (such as the comparison of A and O). The SBAT curve represents the effective boundary of securities investment. [1]
- Stock market terms.
- The upper edge of the feasible region of the effective portfolio is called the effective boundary. The effective boundary must be convex outward. Also called "Markovitz border"
- The portfolio on the left is impossible, while the portfolio on the right is inefficient. Because the portfolio on the effective boundary has a higher rate of return than a portfolio with the same risk on the right, and a lower risk than a portfolio with the same return on the left.