Portfolio Management - Portfolio Management Section 1
- Option : B
- Explanation : An investor with less steep indifference curves has a lower level of risk aversion.
- Option : A
- Explanation : Investor Y has a low risk aversion coefficient, therefore a high risk tolerance and a higher expected return on the capital allocation line.
- Option : C
- Explanation : Each individual investor’s optimal mix of the risk-free asset and the optimal risky asset is determined by the investor’s risk preference.
- Option : B
- Explanation : The geometric mean return for the fund for the past three years is calculated as: [(1 + 18%) (1 + 15%) (1 - 36%)]1/3 - 1 = - 0.0459 = - 4.59%.
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