<Dl> <Dd> This article is about a financial mathematical concept . For other frontiers described as efficient, see Production possibilities frontier and Pareto frontier . </Dd> </Dl> <Dd> This article is about a financial mathematical concept . For other frontiers described as efficient, see Production possibilities frontier and Pareto frontier . </Dd> <P> In modern portfolio theory, the efficient frontier (or portfolio frontier) is an investment portfolio which occupies the' efficient' parts of the risk - return spectrum . Formally, it is the set of portfolios which satisfy the condition that no other portfolio exists with a higher expected return but with the same standard deviation of return . The efficient frontier was first formulated by Harry Markowitz in 1952 . </P> <P> A combination of assets, i.e. a portfolio, is referred to as "efficient" if it has the best possible expected level of return for its level of risk (which is represented by the standard deviation of the portfolio's return). Here, every possible combination of risky assets can be plotted in risk--expected return space, and the collection of all such possible portfolios defines a region in this space . In the absence of the opportunity to hold a risk - free asset, this region is the opportunity set (the feasible set). The positively sloped (upward - sloped) top boundary of this region is a portion of a hyperbola and is called the "efficient frontier ." </P>

What is the efficient frontier in portfolio theory