The Indifference Curves of Two Investors Are Plotted Against a Single

question 35

Multiple Choice

The indifference curves of two investors are plotted against a single budget line. Indifference curve A is shown as tangent to the budget line at a point to the left of indifference curve B's tangency to the same line.

• A) Investors A and B will hold the same portfolio.
• B) Investors A and B will have different portfolios of the same standard deviation.
• C) Investors A and B will have different portfolios of the same rate of return.
• D) Investors A and B will have different portfolios but have the same level of risk aversion.
• E) Investor A will expect to earn a lower rate of return than investor B.

---

Definitions:

Learning

Learning is the process of acquiring new understanding, knowledge, behaviors, skills, values, or preferences, often as a result of study, experience, or teaching.

Memory

The cognitive ability to remember and recall previous experiences, events, facts, and impressions.

Negative Reinforcement

A psychological concept where the removal of an unfavorable event or outcome after the display of a behavior increases the likelihood of that behavior being repeated in the future.

Thorndike's Law Of Effect

A psychological principle stating that behaviors followed by satisfying consequences are more likely to be repeated, while those followed by unpleasant consequences are less likely to be repeated.