In a return-standard deviation space, which of the following statements is(are) true for risk-averse investors (The vertical and horizontal lines are referred to as the expected return-axis and the standard deviation-axis, respectively.)
I. An investor's own indifference curves might intersect.
II. Indifference curves have negative slopes.
III. In a set of indifference curves, the highest offers the greatest utility.
IV. Indifference curves of two investors might intersect.
A)I and II only
B)II and III only
C)I and IV only
D)III and IV only
E)None of the options

Question

Quizplus · Accepted Answer

An investor's indifference curves are parallel (thus they cannot intersect) and have positive slopes.The highest indifference curve (the one in the most northwestern position) offers the greatest utility.Indifference curves of investors with similar risk-return trade-offs might intersect.

In a Return-Standard Deviation Space, Which of the Following Statements