The indifference curves of two investors are plotted against a single portfolio budget line, where standard deviation is on the horizontal axis and expected return on the vertical axis. Indifference curve A is shown as tangent to the budget line at a point to the left of indifference curve B's tangency to the same line. Investors A and B are equally risk averse. Investor A is less risk averse than investor B. O It is not possible to say anything about either the risk aversion or the portfolio of the two investors. It is not possible to say anything about the risk aversion of the two investors, but they will hold the same portfolio. Investor A is more risk averse than investor B.

The indifference curves of two investors are plotted against a single portfolio budget line, where standard deviation is on the horizontal axis and expected return on the vertical axis. Indifference curve A is shown as tangent to the budget line at a point to the left of indifference curve B's tangency to the same line. Investors A and B are equally risk averse. Investor A is less risk averse than investor B. O It is not possible to say anything about either the risk aversion or the portfolio of the two investors. It is not possible to say anything about the risk aversion of the two investors, but they will hold the same portfolio. Investor A is more risk averse than investor B.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.9P

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