Consider a Risky Portfolio, A, with an Expected Rate of Return

question 10

Multiple Choice

Consider a risky portfolio, A, with an expected rate of return of 0.15 and a standard deviation of 0.15, that lies on a given indifference curve. Which one of the following portfolios might lie on the same indifference curve for
A risk averse investor?

• A) E(r) = 0.15; Standard deviation = 0.20
• B) E(r) = 0.15; Standard deviation = 0.10
• C) E(r) = 0.10; Standard deviation = 0.10
• D) E(r) = 0.20; Standard deviation = 0.15
• E) E(r) = 0.10; Standard deviation = 0.20

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Definitions:

Solid Objects

Physical items characterized by rigidity and resistance to changes in shape or volume, as opposed to liquids or gases.

Dreaming

A mental activity that occurs during sleep, featuring a series of thoughts, images, or emotions occurring in the mind.

Pinch

The act of squeezing tightly between two surfaces, such as fingers, usually causing minor pain.

Awake

The state of being conscious and aware of one's surroundings after being asleep or not fully conscious.