【正文】 that are fair games.II) Riskneutral investors judge risky investments only by the expected returns.III) Riskaverse investors judge investments only by their riskiness.IV) Riskloving investors will not engage in fair games.II onlyC.4.In the meanstandard deviation graph an indifference curve has a ________ slope.zeroC.5.In the meanstandard deviation graph, which one of the following statements is true regarding the indifference curve of a riskaverse investor?It is the locus of portfolios that have the same standard deviations and different rates of return.C.6.In a returnstandard deviation space, which of the following statements is(are) true for riskaverse investors? (The vertical and horizontal lines are referred to as the expected returnaxis and the standard deviationaxis, respectively.)I) An investor39。I and II onlyB.None of the optionsfor the same risk, David requires a higher rate of return than Elias.B.Cannot be determinedA.s degree of financial securityC.The investor39。A. 15%C. 10%A portfolio that pays 10% with a 60% probability or 5% with 40% probability.B.11.A portfolio has an expected rate of return of and a standard deviation of . The riskfree rate is 6%. An investor has the following utility function: U = E(r) (A/2)s2. Which value of A makes this investor indifferent between the risky portfolio and the riskfree asset?6C.E(r) = 。E(r) = 。E(r) = 。E(r) = 。14.A.4E.U = E(r) (A/2)s2,where A = .Which investment would you select if you were risk neutral?2C.16.A.s aversion to risk.C.although not known with perfect certainty, do allow the advisor to create more suitable portfolios for the client.D.A.should be considered in the context of the effect on overall portfolio volatility and should be bined with the riskiness of other individual assets in the proportions these assets constitute the entire portfolio.will not be undertaken by a riskaverse investor.B.will not be undertaken by a riskaverse investor and is a riskless investment.investors will lose money.B.terminal wealth will be less than initial wealth.will decrease as the rate of return increases.B.will increase as the rate of return increases.the rate that a riskfree investment would need to offer with certainty to be considered equally attractive as the risky portfolio.B.represented by the scaling factor in the utility function.Investment D dominates all of the other investments.D.s indifference curves, which of the following is true? Assume that the graph shows expected return on the vertical axis and standard deviation on the horizontal axis.I) Steve and Edie39。s indifference curves will have steeper slopes than Edie39。s will be upward sloping.I and IIIC.25.The capital allocation line can be described as theinvestment opportunity set formed with two risky assets.C.The slope of the CAL is also called the rewardtovolatility ratio.D.minimizes both her risk and return.D.s expected return and standard deviation are __________ and __________, respectively. B. D.29.An investor invests 30% of his wealth in a risky asset with an expected rate of return of and a variance of and 70% in a Tbill that pays 6%. His portfolio39。30.An investor invests 40% of his wealth in a risky asset with an expected rate of return of and a variance of and 60% in a Tbill that pays %. His portfolio39。None of the optionsA. C. 85% and 15%B.Cannot be determined30% and 70%B.Cannot be determinedinvesting $100 in the risky asset.B.Such a portfolio cannot be formed..B.Cannot be determined Variance = Security D: E(r) = 。The set of portfolios formed with the Tbill and security A.B.Cannot be determined。Cannot be determined。 。 D.Cannot be determined$240。$100。Cannot be determinedCannot be determinedB.$568。 $54。 $378measuring the standard deviation of returns.B.None of the optionsrewardtovolatility ratio increasing.B.increase in the portfolio proportion of the riskfree asset.assessing risk tolerance.B.44.Based on their relative degrees of risk toleranceall investors will have the same portfolio asset allocations.C.considerable security analysis.D.the indifference curve.D.their term to maturity is identical to most investors39。 desired holding periods.s plete portfolio?%C.49.Your client, Bo Regard, holds a plete portfolio that consists of a portfolio of risky assets (P) and TBills. The information below refers to these assets.%D.A.E(rC) = + Standard Deviation of CE.What are the proportions of stocks A, B, and C, respectively, in Bo39。40%, 25%, 35%B.20%, %, %find the utility of a portfolio with 0% in the riskfree asset.B.change the riskfree rate and find the utility level that results in the same standard deviation.I, III, and IVB.I, II, III, and IVA. C. A. C. E.A.57% and 43%E.A.40% and 60%E.A..E.A.% and %E.A.40% and 60%E.A..E.A.% and %E.A.% and %E.A.investing $43 in the risky asset and $57 in the riskfree asset.E.A..E.66.Discuss the differences between investors who are risk averse, risk neutral, and risk loving.68.What is a fair game? Explain how the term relates to a riskaverse investor39。 Eddie, who is a riskneutral investor。74.You are evaluating two investment alternatives. One is a passive market portfolio with an