CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

Which statement is true?

I. For an investor, a portfolio with a utility of 10 is 5 times better than a portfolio with a utility of 2.
II. Utility can be compared among different investors.
Correct Answer: Neither of these statements is true.

I. Utility can only be used to rank various investments.
II. It is a personal concept.

User Contributed Comments 4

User Comment
schweitzdm How is 1 false?

The AN notes state: "it is possible to assign a utility score to any portfolio"

A utility score will differ from person to person, but for John Doe, he could use utility scores to rank the two portfolios, couldn't he?
charliedba You can assign an utility score but you cannot say 10 is 5 times better than 2.
sangiljin Utility score is "ordinal" or "interval", not "ratio".
chesschh UTILITY THEORY IS A MATTER OF RISK TOLERANCE, NOT WHICH IS GREATER
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