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Discuss the mean-variance frontier in the optimal portfolio theory for the fund

Discuss the mean-variance frontier in the optimal portfolio theory for the fund

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In a modern portfolio theory which is also known as mean - variance analysis where mean is used as a measure of return and variance is used as a measure of risk. It provide optimal potfolio on the efficient frontier which is a curve formed by all the different portfolio. We take only upper half of the curve and it provide optimal portfolio at tangency with capital allocation line.

CAL has intercept as risk free asset and tagency point with efficient frontier will give the optimal portfolio for the fund.

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