Which of the following statements is true?
A)The minimum risk portfolio generates the highest returns and is thus likely to be chosen by risk-seeking FI managers.
B)The minimum risk portfolio does not generate the highest returns and is thus likely to be chosen by risk-averse FI managers.
C)The minimum risk portfolio does not generate the highest returns and is thus likely to be chosen by risk-seeking FI managers.
D)The minimum risk portfolio does not generate the highest returns and is thus likely to be chosen by risk-indifferent FI managers.

Question

Quizplus · Accepted Answer

The minimum risk portfolio is designed to minimize risk and not to maximize returns. Therefore, risk-averse FI managers are more likely to choose the minimum risk portfolio as they prioritize risk management over returns.

Which of the Following Statements Is True