CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

In the mean-standard deviation graph, which one of the following statements is true regarding the indifference curve of a risk-averse investor?

A. It is the locus of portfolios that have the same expected rates of return and different standard deviations.
B. It is the locus of portfolios that have the same standard deviations and different rates of return.
C. It is the locus of portfolios that offer the same utility according to returns and standard deviations.
D. It connects portfolios that offer increasing utilities according to returns and standard deviations.
Correct Answer: C

It represents the same utility, different combination of return and risk.

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