The Certainty Equivalent Rate of a Portfolio Is

question 37

Multiple Choice

The certainty equivalent rate of a portfolio is

• A)the rate that a risk-free investment would need to offer with certainty to be considered equally attractive as the risky portfolio.
• B)the rate that the investor must earn for certain to give up the use of his money.
• C)the minimum rate guaranteed by institutions such as banks.
• D)the rate that equates "A" in the utility function with the average risk aversion coefficient for all risk-averse investors.

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