- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 62. Portfolio Risk and Return: Part I
- Subject 4. Risk Aversion and Portfolio Selection
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. |