Modern portfolio theory assumes that most investors are
A) Risk averse
B) Risk neutral
C) Risk seekers
D) Risk tolerant
E) None of the above

Question

Quizplus · Accepted Answer

Modern portfolio theory assumes that most investors are risk averse, which means they prefer investments with higher expected returns for a given level of risk. This assumption is based on the observation that most investors tend to avoid risky investments unless they are compensated for taking on additional risk.

Modern Portfolio Theory Assumes That Most Investors Are