The Condition for Optimal Portfolio Choice Can Be Represented By $E \left[ U ^ { \prime } / \left( 1 + r _ { f } \right) \right] = 0$

question 9

Multiple Choice

The condition for optimal portfolio choice can be represented by:

• A) \(E \left[ U ^ { \prime } / \left( 1 + r _ { f } \right) \right] = 0\) .
• B) \(E \left[ U ^ { \prime } \left( r - r _ { f } \right) \right] = 0\) .
• C) \(E \left[ U ^ { \prime } r / \left( 1 + r _ { f } \right) \right] = 0\) .
• D) \(E \left[ U ^ { \prime } ( 1 + r ) \right] = 0\) .

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Definitions:

Statement Of Income

A financial document that outlines a company's revenues, expenses, and net income over a specific period, providing insight into financial performance.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Single-Step

A simplified method used in income statement preparation that aggregates all revenues and subtracts all expenses to calculate net income.