- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 1. Portfolio Risk and Return: Part I
- Subject 2. Risk Aversion and Portfolio Selection
CFA Practice Question
Investors' utility curves will be very ______ if they are very risk-averse, indicating they will not tolerate much additional risk to obtain additional returns.
B. flat
C. curvilinear
D. curved
E. convex
A. steep
B. flat
C. curvilinear
D. curved
E. convex
Correct Answer: A
If investors are very risk-averse, their utility curves will be very steep, indicating they will not tolerate much additional risk to obtain additional returns.
User Contributed Comments 3
| User | Comment |
|---|---|
| zeiad | their utility curves will be very steep |
| DonAnd | Steep utility curve = conservative investor Flat utility curve = less risk averse investor |
| kseeba17 | Think of it in terms of elasticity |