Reference no: EM131960591

1. Elias is a risk-averse investor. David is a less risk-averse investor than Elias. Therefore,

for the same risk, David requires a higher rate of return than Elias.

for the same return, Elias tolerates higher risk than David.

for the same risk, Elias requires a lower rate of return than David.

for the same return, David tolerates higher risk than Elias.

2. In a return-standard deviation space, which of the following statements is(are) true for risk-averse investors? (The vertical and horizontal lines are referred to as the expected return-axis and the standard deviation-axis, respectively.)

I) An investor's own indifference curves might intersect.

II) Indifference curves have negative slopes.

III) In a set of indifference curves, the highest offers the greatest utility.

IV) Indifference curves of two investors might intersect.

Multiple Choice

I and II only

II and III only

I and IV only

III and IV only

None of the options are correct.