- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 1. Portfolio Risk and Return: Part I
- Subject 6. Optimal Portfolio
CFA Practice Question
Which of the following statement(s) is (are) true regarding the selection of a portfolio from those that lie on the Capital Allocation Line?
II. More risk-averse investors will invest less in the optimal risky portfolio and more in the risk-free security than less risk-averse investors.
III. Investors choose the portfolio that maximizes their expected utility.
I. Less risk-averse investors will invest more in the risk-free security and less in the optimal risky portfolio than more risk-averse investors.
II. More risk-averse investors will invest less in the optimal risky portfolio and more in the risk-free security than less risk-averse investors.
III. Investors choose the portfolio that maximizes their expected utility.
Correct Answer: II and III
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