Suppose an Investor Equally Allocates Their Wealth Between a Risk-Free

question 138

Multiple Choice

Suppose an investor equally allocates their wealth between a risk-free asset and a risky asset. If the MRS of the current allocation is less than the slope of the budget line, then the investor should:

• A) shift more of their wealth to the risky asset.
• B) shift more of their wealth to the risk-free asset.
• C) keep the same asset allocation.
• D) We do not have enough information to answer this question.

---

Definitions:

Remove

The act of taking something away or eliminating it from a particular location or context.

Reports

A document providing detailed information on a specific topic, often used for analysis, decision-making, or communicating findings.

Fall Prevention

Strategies and measures employed to reduce the risk of falls, especially in the elderly or individuals with mobility impairments.

Risk Assessment

The process of identifying potential hazards and analyzing what could happen if the hazard occurs, often used to prioritize safety measures and prevent harm.