- 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
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 |