Investors choose a portfolio on the efficient frontier based on their utility functions that reflect their attitudes towards risk.

Question

Quizplus · Accepted Answer

This is true, investors choose a portfolio on the efficient frontier based on their utility functions, which reflect their risk attitudes. The efficient frontier represents the set of portfolios that maximize expected return for a given level of risk, and investors choose a portfolio along the efficient frontier based on their level of risk aversion or risk tolerance.

Investors Choose a Portfolio on the Efficient Frontier Based on Their