CFA Practice Question

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CFA Practice Question

Risk aversion has all of the following implications for the investment process EXCEPT ______
A. the promised yield on AAA-rated bonds is higher than on A-rated bonds.
B. the security market line is upward-sloping and investors expect a positive relationship between expected return and expected risk.
C. investors prefer portfolios that lie on the efficient frontier to other portfolios with equal rates of return.

User Contributed Comments 5

User Comment
neelu8 SML is a beta(x) v/s exp return(y)of the market portfolio
chuong AAA rate bond is less risk than A rate bond-> yield A rate bond is higer than AAA rate bond
CoffeeGirl Risk aversion, required even higher return for higher risk. (greater premium)
AAA is less risker than AA bond. AA is less risker than A bond.
jackwez whoops...
StanleyMo i would buy that AAA if interest is higher than AA,lol.
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