What is the efficient frontier concept and its implications for portfolio construction?

What is the efficient frontier concept and its implications for portfolio construction?

• A. The frontier is a theoretical line that ignores risk in portfolio selection.
• B. The frontier shows all possible returns regardless of risk.
• C. The frontier shows portfolios with the best expected return for a given risk, guiding optimal risk-return choices.
• D. The frontier is the set of portfolios with minimum variance for a given return.

Answer: (C)