▁its ▁" stand ▁alone ▁risk ". ▁In ▁the ▁C AP M ▁context , ▁port folio ▁risk ▁is ▁represented ▁by ▁higher ▁variance ▁i . e . ▁less ▁predict ability . ▁In ▁other ▁words , ▁the ▁beta ▁of ▁the ▁port folio ▁is ▁the ▁defining ▁factor ▁in ▁reward ing ▁the ▁system atic ▁expos ure ▁taken ▁by ▁an ▁invest or . ▁ ▁E fficient ▁front ier ▁ ▁The ▁C AP M ▁assumes ▁that ▁the ▁risk - return ▁profile ▁of ▁a ▁port folio ▁can ▁be ▁optimized — an ▁optimal ▁port folio ▁displays ▁the ▁lowest ▁possible ▁level ▁of ▁risk ▁for ▁its ▁level ▁of ▁return . ▁Additionally , ▁since ▁each ▁additional ▁asset ▁introduced ▁into ▁a ▁port folio ▁further ▁divers ifies ▁the ▁port folio , ▁the ▁optimal ▁port folio ▁must ▁compr ise ▁every ▁asset , ▁( ass uming ▁no ▁trad ing ▁costs ) ▁with ▁each ▁asset ▁value - weight ed ▁to ▁achieve ▁the ▁above ▁( ass uming ▁that ▁any ▁asset ▁is ▁infinitely ▁divis ible ). ▁ ▁All ▁such ▁optimal ▁port fol ios , ▁i . e ., ▁one ▁for ▁each ▁level ▁of ▁return , ▁compr ise ▁the ▁efficient ▁front ier . ▁ ▁Because ▁the ▁un system atic ▁risk ▁is ▁divers ifiable , ▁the ▁total ▁risk ▁of ▁a ▁port folio ▁can ▁be ▁viewed ▁as ▁beta . ▁ ▁Ass um ptions ▁▁ ▁All ▁invest ors : ▁▁ ▁A im ▁to ▁maxim ize ▁economic ▁util ities ▁( Asset ▁quantities ▁are ▁given ▁and ▁fixed ). ▁ ▁Are ▁rational ▁and ▁risk - a verse . ▁ ▁Are ▁broad ly ▁divers ified ▁across ▁a ▁range ▁of ▁invest