The variable (A)in the utility function represents the:
A)investor's return requirement.
B)investor's aversion to risk.
C)certainty-equivalent rate of the portfolio.
D)minimum required utility of the portfolio.
E)none of the above.

Question

Quizplus · Accepted Answer

The variable (A) in the utility function represents the investor's aversion to risk. This means that the higher the value of A, the more risk-averse the investor is.

The Variable (A)in the Utility Function Represents The