The graph to the right shows the budget line and indifference curves for two investors, A and B. Labels with the subscript 'm' refer to the stock market as a whole. Which of the following correctly interprets the graphical analysis? OA. B is more risk averse than A. Although both investors are risk averse and will want to invest in a mixture of stocks and risk-free T-bills, A will invest a greater portion of her wealth in stocks OB. A is more risk averse than B. While A will invest in a mixture of stocks and risk-free T-bills, B will want to invest more than 100 percent of her wealth in stocks ⒸC. A is more risk averse than B. Although both investors are risk averse and will want to invest in a mixture of stocks and risk-free T-bills, B will invest a greater portion of her wealth in stocks OD. B is more risk averse than A. While B will invest in a mixture of stocks and risk-free T-bills, A will want to invest more than 100 percent of her wealth in stocks RA R U₂ Standard deviation of return

The graph to the right shows the budget line and indifference curves for two investors, A and B. Labels with the subscript 'm' refer to the stock market as a whole. Which of the following correctly interprets the graphical analysis? OA. B is more risk averse than A. Although both investors are risk averse and will want to invest in a mixture of stocks and risk-free T-bills, A will invest a greater portion of her wealth in stocks OB. A is more risk averse than B. While A will invest in a mixture of stocks and risk-free T-bills, B will want to invest more than 100 percent of her wealth in stocks ⒸC. A is more risk averse than B. Although both investors are risk averse and will want to invest in a mixture of stocks and risk-free T-bills, B will invest a greater portion of her wealth in stocks OD. B is more risk averse than A. While B will invest in a mixture of stocks and risk-free T-bills, A will want to invest more than 100 percent of her wealth in stocks RA R U₂ Standard deviation of return

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The graph to the right shows the budget line and indifference curves for two investors, A and B. Labels with the subscript 'm' refer to the stock market as a whole.
Which of the following correctly interprets the graphical analysis?
O A. B is more risk averse than A. Although both investors are risk averse and will want to invest in a mixture of stocks and risk-free T-bills, A will invest a
greater portion of her wealth in stocks.
OB. A is more risk averse than B. While A will invest in a mixture of stocks and risk-free T-bills, B will want to invest more than 100 percent of her wealth in
stocks.
ⒸC. A is more risk averse than B. Although both investors are risk averse and will want to invest in a mixture of stocks and risk-free T-bills, B will invest a
greater portion of her wealth in stocks.
O D. B is more risk averse than A. While B will invest in a mixture of stocks and risk-free T-bills, A will want to invest more than 100 percent of her wealth in
stocks
R
GA
UA
om B
Standard deviation of return
UB

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