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Provide definitions for the following: 1.Envelope Portfolio 2.Efficient Portfolio 3.Feasible Portfolio 4.Infeasible Portfolio

Provide definitions for the following:

1.Envelope Portfolio

2.Efficient Portfolio

3.Feasible Portfolio

4.Infeasible Portfolio

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Answer #1

1. Envelope portfolio : An envelope portfolio has the lowest variance amongst all the portfolio which have the same expected returns. It minimises the risk for a given return.

2. Efficient portfolios: the efficient portfolio is one which gives the highest expected returns for a given level of risk and the lowest risk for a given level of return. The line which joins all these efficient portfolio is called the efficient frontier.

3. Feasible portfolio : It is a portfolio which is picked keeping in mind the investors capital resources , his goals and his tolerance for risk. It is a portfolio that can be built given the assets available with him. Each feasible portfolio has its own risk and reward profile , and is not necessarily an efficient portfolio.

4. Infeasible portfolio : An infeasible portfolio is a portfolio that does not meat the risk return characteristics of the investor.

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