- CFA Exams
- CFA Level I Exam
- Study Session 18. Portfolio Management (1)
- Reading 52. Portfolio Risk and Return: Part I
- Subject 4. Risk Aversion and Portfolio Selection
CFA Practice Question
Utility curves will be very ______ for a less risk-averse investor.
A. flat
B. curved
C. curvilinear
Explanation: 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. A less risk-averse investor will have less steep utility curves.
User Contributed Comments 6
| User | Comment |
|---|---|
| vivi2005 | note: the "less" in the question!!!!!! |
| Evgenia1 | good point vivi2005 |
| anal11 | note the "_____" in the question!!!!! :-)vivi2005 |
| tijelo | True |
| nmech1984 | L.E.S.Shit |
| Albireo | The word 'less' here is either misleading or incorrect. And also the word 'very' is misleading and/or incorrect. Two investors could be different in their risk aversion. It doesn't mean the LESS risk-averse one will have a very flat utility/indifference curve, right?? |