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Portfolio managers tend to use the efficient frontier analysis as a modeling approach that gives decision makers the analytical tool to optimize portfolios given resource constraints such as risk. Consider that your company is risk-averse, on which side of the efficient frontier curve should the undertaken portfolios lie?
Correct Answer: B
Explanation This is an important question and requires that you understand the efficient frontier concept very well . A quick explanation would be that portfolios are considered sub-optimal if they lie below the curve, non-realistic with a non-realistic risk level if they lie above the curve; so the best portfolios are those who lie on the curve or along the bounds of the curve, however, for a risk-averse company such as the one in the given scenario, chosen portfolios lie in the low-risk zone which is along the lower bounds of the curve (to the left)