The Optimal Portfolio for a Risk-Averse Investor

question 48

Multiple Choice

The optimal portfolio for a risk-averse investor:

• A)cannot be determined
• B)occurs at the point of tangency between the highest indifference curve and the highest expected return
• C)occurs at the point of tangency between the highest indifference curve and the efficient set of portfolios
• D)occurs at the point of tangency between the highest expected return and lowest risk efficient portfolios

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Definitions:

Bananas

A long curved fruit that grows in clusters and has soft pulpy flesh and yellow skin when ripe.

Utility Function

This term represents a model or formula that economists and theorists use to calculate the amount of satisfaction or happiness a consumer derives from consuming a particular bundle of goods.

Nuts

Typically refers to a hard-shelled fruit of some plants that have an indehiscent seed, or in a broader sense, a significant source of nutrition and energy in the human diet.

Berries

Tiny, succulent fruits that are usually eatable, often having a juicy texture, spherical shape, vivid colors, and a flavor that ranges from sweet to sour.