Are you looking for efficient frontier analysis assignment help from experts? Then, we are here to help. Our financial econometrics assignment help experts will help you complete any financial analysis. You only need to request, “I need help with my finance assignment” by clicking on the order now button.
What are the uses of Efficient Frontier Analysis in SRM?
In current portfolio theory, the efficient frontier, also known as the portfolio frontier, is a collection of ideal or optimal portfolios meant to deliver the best return for the least risk. It is deemed adequate if no other portfolio offers higher returns for a lower or similar amount of risk. The level of hazard resistance of the financial backer determines where portfolios are located in the practical wilderness. It’s a risk-return portfolio that includes the “efficient” parts of the risk-return spectrum. Portfolios that cluster to the right of the efficient frontier have a higher level of risk than portfolios that cluster to the left of the efficient frontier, making them sub-optimal.
A bent line represents the efficient border—each increase in risk results in a somewhat lower profit level. The standard deviation as a proportion of danger is plotted on the x-axis, while the expected profit is plotted on the y-axis. It explains how the risk-return trade-off in a portfolio works. In other words, when the marginal return to risk decreases, a curve emerges. As a result, the ideal portfolios on the effective frontier have a higher degree of diversification than other portfolios.