solution

QUESTION 13

Considering the following four Portfolios’ numbers, what would be the best choices for a risk-averse investor (maximizing return per risk) and a risk-neutral Investor (maximizing return only?

Assume the risk-free rate is 5%

Portfolio A has an expected return of 15% and a standard deviation of 2546
Portfolio B has an expected return of 10% and a standard deviation of 20%
Portfolio Chas an expected return of 20% and a standard deviation of 80%
Portfolio-D has an expected return of 5% and a standard deviation of 10%

O The risk averse investor would choose portfolio B.
The risk neutral investor would choose portfolio

O The risk-averse investor would choose portfolio C
The risk neutral investor would choose portfolio C.

O The risk-averse investor would choose portfolio D
The risk-neutral investor would choose portfolio A

O The risk-averse investor would choose portfolio A
The risk neutral investor would choose portfolio C
 
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