Compare risk-return characteristics of the two portfolios


Problem

You work as an investment analyst for a fund management firm. Your manager has asked you to review the portfolios of two clients, Sonal manufacturing company and Desat Insurance company. You find that both portfolios lie on the efficient frontier but Sonal's portfolio is virtually identical to the market portfolio whereas Desai's portfolio is not.

Compare risk-return characteristics of these two portfolios and determine which portfolio is the superior one.

 

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Corporate Finance: Compare risk-return characteristics of the two portfolios
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