Treynor Showed That Rational,risk Averse Investors Always Prefer Portfolio Possibility

question 36

Multiple Choice

Treynor showed that rational,risk averse investors always prefer portfolio possibility lines that have

• A) Zero slopes.
• B) Slightly negative slopes.
• C) Highly negative slopes.
• D) Slightly positive slopes.
• E) Highly positive slopes.

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Definitions:

Comparative Advantage

An economic theory stating that a country or individual can produce goods at a lower opportunity cost than their trade partners, leading to more efficient trade outcomes.

Absolute Advantage

A situation where an entity can produce a good or service more efficiently (using fewer resources) than another entity.

Opportunity Cost

The expense incurred by not choosing the next most favorable option during a decision-making process.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, a foundational concept in economics that emphasizes the potential benefits that are missed when choosing one option over another.