CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

The indifference curve for risk-seeking investors runs from ______.

A. southwest to northeast
B. northwest to southeast
C. west to east (a horizontal line)
Correct Answer: B

A is for risk-averse investors and C is for risk-neutral investors.

User Contributed Comments 4

User Comment
johntan1979 I'm not sure if I totally understand this... Does this mean that a risk-seeking investor will demand lower returns for every increase in risk? Or should I say they are fine with lower returns with increasing risks?
gill15 Second part of what you said --- there fine with substituting risk for return
Debashree why would someone do that..weird
Teeto Debashree, because risk is not just downside. It is increased volatility, which assumes bigger potential upside as well.
So for some people 1/100 chance of winning a hundred is better than 2 dollars certain cash. That's where casinos make money.
You need to log in first to add your comment.