Indifference curves reflect -------------- while the efficient set of portfolios represent ---------------.
A)portfolio possibilities; investor preferences.
B)investor preferences; portfolio possibilities.
C)portfolio return; investor risk.
D)investor preferences; portfolio return.

Question

Quizplus · Accepted Answer

Indifference curves represent the investor's preferences for risk and return while the efficient set of portfolios reflects the range of portfolio possibilities that maximize expected return for a given level of risk or minimize risk for a given level of return. Therefore, option B is the correct choice.

Indifference Curves Reflect -------------- While the Efficient Set of Portfolios