When graphing the efficient frontier, the two axes are:

When graphing the efficient frontier, the two axes are:
A . Asset beta and standard deviation of the market portfolio
B . Expected return and asset’s beta
C . Portfolio return and market standard deviation
D . Portfolio return and portfolio standard deviation

View Answer

Answer: D

Explanation:

The efficient frontier is plotted on a graph with portfolio return (mean) as the y-axis and portfolio volatility, or standard deviation, on the x-axis. Asset beta and standard deviation of the market portfolio have nothing to do with the determination of the efficient portfolio. Therefore Choice ‘d’ is the correct answer, and the rest of the choices are incorrect.