Which type of instrument can earn her maximum return

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This figure shows year-by-year historical rates of return (inflation adjusted) for five types of investments instruments traded in the US capital markets from 1925 to 2011. Each line represents the return & risk (beta) relationship of its respective instrument. You have to make a portfolio report for a Pakistani investor in the US. She wants to know the following details before investing her money in the US capital market as part of her international portfolio diversification strategy.

i. Which type of instrument can earn her maximum return and what would be the risk-return tradeoff in this case if she wants to invest 25% of money in such an instrument?

Reference no: EM132569488

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