1 the concept of marginal utility for a risk-averse, Ask an Expert

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1. The concept of marginal utility for a risk-averse investor is best described by which of the following statements?

The utility function of a risk-averse investor is concave because as a person enjoys greater levels of net wealth additional dollars take on less value from a well-being standpoint.

The utility function of a risk-averse investor is a straight 90-dgree line because each marginal dollar of benefit is equal to earlier dollars.

The utility function of a risk-averse investor is convex because as a person enjoys greater levels of net wealth additional dollars take on greater marginal value.

The utility function of a risk-averse investor is a straight 45-degree line because each marginal dollar of benefit is equal to earlier dollars.

2. Under the Separation Property of Portfolio Optimization:

The Capital Market Line reflects the client’s Risk Aversion level

Risky portfolios should reflect the Risk Aversion level for each investor

There is only 1 theoretic optimal Risky portfolio for all investors

The minimum variance point on the Efficient Frontier reflects the optimal Risky portfolio

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92641477

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