(a) According to CAPM, the expected return of a risky asset is larger than the risk free rate. (b) According to CAPM, the expected return of a risky asset increases with its variance. (c) According to the separation property, the optimal risky portfolio for an investor depends on the investor’s personal preference. (d) A less risk-averse investor has a steeper indifference curve for the utility function.
(a) According to CAPM, the expected return of a risky asset is larger than the risk free rate. (b) According to CAPM, the expected return of a risky asset increases with its variance. (c) According to the separation property, the optimal risky portfolio for an investor depends on the investor’s personal preference. (d) A less risk-averse investor has a steeper indifference curve for the utility function.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter3: Risk And Return: Part Ii
Section: Chapter Questions
Problem 3MC: You have been hired at the investment firm of Bowers & Noon. One of its clients doesn’t understand...
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(a) According to
(b) According to CAPM, the expected return of a risky asset increases with its variance.
(c) According to the separation property, the optimal risky portfolio for an investor depends
on the investor’s personal preference.
(d) A less risk-averse investor has a steeper indifference curve for the utility function.
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