In the following graph, the risk and return points are marked as follows: Point
ID: 2775564 • Letter: I
Question
In the following graph, the risk and return points are marked as follows:
Point
Return
Risk
A
15%
10%
B
11%
10%
C
15%
30%
D
25%
30%
F
4%
0%
G
10%
30%
P
16%
17%
Answer the following questions with reference to the points plotted on the graph and explain your answers. The investor is choosing one portfolio on the graph.
A. Which of the points is not achievable? Explain.
B. Which of the portfolios will not be chosen by a rational, risk-averse investor? Explain.
C. Which of the portfolios is most suitable for a risk-neutral investor? Explain.
Point
Return
Risk
A
15%
10%
B
11%
10%
C
15%
30%
D
25%
30%
F
4%
0%
G
10%
30%
P
16%
17%
Explanation / Answer
In the following graph, the risk and return points are marked as follows: Point
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