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Basic Question 13 of 16
The indifference curve for risk-seeking investors runs from ______.
B. northwest to southeast
C. west to east (a horizontal line)
A. southwest to northeast
B. northwest to southeast
C. west to east (a horizontal line)
User Contributed Comments 4
| User | Comment |
|---|---|
| johntan1979 | I'm not sure if I totally understand this... Does this mean that a risk-seeking investor will demand lower returns for every increase in risk? Or should I say they are fine with lower returns with increasing risks? |
| gill15 | Second part of what you said --- there fine with substituting risk for return |
| Debashree | why would someone do that..weird |
| Teeto | Debashree, because risk is not just downside. It is increased volatility, which assumes bigger potential upside as well. So for some people 1/100 chance of winning a hundred is better than 2 dollars certain cash. That's where casinos make money. |
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Learning Outcome Statements
explain risk aversion and its implications for portfolio selection
CFA® 2025 Level I Curriculum, Volume 2, Module 1.