Asset A has an expected return of 15% and a reward-to-variability ratio of .4.Asset B has an expected return of 20% and a reward-to-variability ratio of .3.A risk-averse investor would prefer a portfolio using the risk-free asset and ______.
A) asset A
B) asset B
C) no risky asset
D) can't tell from the data given

Question

Quizplus · Accepted Answer

A risk-averse investor would prefer the asset with the higher reward-to-variability ratio, which indicates a better trade-off between risk and return. Asset A has a higher reward-to-variability ratio of 0.4 compared to Asset B's 0.3, making it more attractive for a risk-averse investor.

Asset a Has an Expected Return of 15% and a Reward-To-Variability