Consider portfolios that are comprised from 10 stocks and lie on the same minimum variance frontier. Assume that any portfolio on this frontier has a short position in at least one stock. Sketch this frontier. Now assume that short selling is not allowed (this is a commitment of some mutual funds) and draw a corresponding minimum variance frontier on the same graph. Explain the difference (if any) between the two frontiers.
So, what is the difference in the graphs if short selling is allowed and not allowed?
Thanks!