The optimal trade-off between risk and return for a given portfolio problem can be summarized by the

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The question asks for the term that summarizes the optimal trade-off between risk and return for a given portfolio problem. 
Option 1: 'efficient frontier.' This is the standard term in portfolio theory that describes the set of portfolios offering the highest expected return for a given level of risk (or the lowest risk for a given level of return). It captures the best possible trade-offs under the assumptions of the model, making it the correct descriptor.
Option 2: 'investment frontier.' While this sounds plausible, it is not the conventional terminology used in the context of risk-return trade-offs in portfolio optimization. The standard phrase is 'efficient frontier.'
Option 3: 'portfolio boundary.' Although a boundary concept is related to the idea of limiting risk or return, the precise and widely accepted term in modern portfolio theory is 'efficient frontier,' not 'portfolio boundary.'
Option 4: 'variance boundary.' This option focuses on a single statistic (variance) rather than the holistic trade-off between risk and return. It does not represent the complete frontier of optimal risk-return combinations and is therefore inaccurate as the general descriptor.

QANT_620-VA1-2025SP-VR Final Exam

The optimal trade-off between risk and return for a given portfolio problem can be summarized by the

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