Answer: W

## ✅ Correct Answer: **A — Portfolio W** ### 📌 Understanding the Portfolio Possibilities Curve A portfolio possibilities curve (or efficient frontier) shows all possible combinations of two assets—in this case, **stocks and bonds**—and their associated **risk and return**. --- ### 🔍 Step 1: Identify the Endpoints - **Point Y** → **100% bonds** - Lowest expected return - Lower risk - **Point Z** → **100% stocks** - Highest expected return - Highest risk Moving from **Y to Z** increases the allocation to stocks. --- ### 🔍 Step 2: Locate a 90% Stock / 10% Bond Portfolio - A **90% stock allocation** is very aggressive and should lie **close to the 100% stock endpoint (Z)**. - **Point W** is just slightly away from Z, reflecting a small bond allocation. - This makes **W** the best match for a **90% stocks / 10% bonds** portfolio. --- ### ❌ Why the Other Options Are Incorrect - **X**: Typically the **Minimum Variance Portfolio**, with a more balanced asset mix. - **Y and Z**: Represent **100% allocations**, not a mix. --- ### 🧠 Key Takeaway Higher stock weights push portfolios **closer to Z**. A small bond allocation shifts the point slightly inward—**exactly where W lies**.

Author: LeetQuiz .