Consider the Following Statements When Answering This Question: I

question 54

Multiple Choice

Consider the following statements when answering this question: I. The allocation of a risk-averse investor's portfolio between a risk free asset and a risky asset never changes if the rate of return on both assets increases by the same amount.
II) Given the choice between investing in a risk free asset or a risky asset with higher expected returns, the utility maximizing portfolio of a risk neutral or risk loving investor would never include the risk free asset.

• A) I and II are true.
• B) I is true and II is false.
• C) I is false and II is true.
• D) I and II are false.

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Definitions:

Columbian Expeditions

Voyages led by Christopher Columbus that reached the Americas in the late 15th century, marking the beginning of European exploration and colonization.

Catholic Church

The largest Christian church, led by the Pope, with a worldwide membership of over a billion people, known for its traditions, doctrines, and influence in global affairs.

South America

A continent located in the Western Hemisphere, mostly in the Southern Hemisphere, with a rich diversity of cultures, climates, and ecosystems.

Taino Indians

Indigenous peoples of the Caribbean who were among the first to encounter Christopher Columbus in 1492.