Which of the following properties can be associated with an indifference curve of a risk-averse investor?
A)Indifference curve for a risk-averse investor is a vertical line parallel to the variance axis.
B)Two indifference curves can intersect at the equilibrium combination of risk and return.
C)An indifference curve closer to the expected return axis gives a better utility than the one farther away.
D)Indifference curve for a risk-averse investor is always downward sloping.

Question

Quizplus · Accepted Answer

Indifference curves for a risk-averse investor represent combinations of risk and return that provide the same level of utility. A curve closer to the expected return axis indicates higher utility because it offers a higher return for the same level of risk, which is preferable for a risk-averse investor.

Which of the Following Properties Can Be Associated with an Indifference