1. All rational investors hold efficient portfolios. Efficient portfolios are those which offer:
A. Highest expected return for a given level of risk.
B. The overall maximum return.
C. Lowest risk for a given expected return.
D. Both A and C
2. The Capital Market Line describes the relationship between expected return and portfolio standard deviation for efficient portfolios. According to the Capital Market Line, all investors are holding what portfolio?
A. Zero beta portfolio
B. Market portfolio
C. Minimum variance portfolio
D. Minimum beta portfolio
E. The average portfolio