CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

For T-bills which are riskless, the risk-aversion coefficient ______
A. is always 0.
B. is always positive.
C. can be positive, 0, or negative.
Explanation: Since the variance is 0 for T-bills, the utility (expected return) is always the same, no matter if the investor is risk-averse or not.

User Contributed Comments 3

User Comment
sarasyed5 can someone please explain? i thought it would be zero
Mhmdjamal risk aversion coefficient depends on the attitude of investor regarding taking risk either risk averse,neutral or lover NOT THE KIND OF SECURITY
kind of security determines variance.
FOR RISK NEUTRAL risk aversion coefficient is ZERO
nmech1984 great question
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