Which of the Following Statement(s)is(are)true Regarding the Selection of a Portfolio

question 38

Multiple Choice

Which of the following statement(s) is(are) true regarding the selection of a portfolio from those that lie on the Capital Allocation Line?

• A) Less risk-averse investors will invest more in the risk-free security and less in the optimal risky portfolio than more risk-averse investors.
• B) More risk-averse investors will invest less in the optimal risky portfolio and more in the risk-free security than less risk-averse investors.
• C) Investors choose the portfolio that maximizes their expected utility.
• D) a and c.
• E) b and c.

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Definitions:

Positive Reinforcement

The addition of a stimulus following a behavior that makes it more likely that the behavior will occur again in the future.

Negative Reinforcement

A type of operant conditioning that removes an unfavorable stimulus to increase the likelihood of a behavior being repeated.

Seamstress

A person, particularly a woman, who sews clothes professionally.

Effectiveness of Punishment

The degree to which punishment successfully modifies behavior, often debated in psychology regarding its influences on behavior and learning.