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For each of the following pairs of investments, indicate which would always be preferred by a rational investor (assuming that these are the only investments available to the investor):   a. Portfolio A r = 18% σ = 20%   Portfolio B r = 14% σ = 20%     Preference   multiple choice 1 Portfolio A Portfolio B Indeterminate     b. Portfolio C r = 21% σ = 22%   Portfolio D r = 19% σ = 16%     Preference:   multiple choice 2 Portfolio C Portfolio D Indeterminate     c. Portfolio E r = 10% σ = 16%   Portfolio F r = 10% σ = 10%     Preference:   multiple choice 3 Portfolio E Portfolio F Indeterminate

For each of the following pairs of investments, indicate which would always be preferred by a rational investor (assuming that these are the only investments available to the investor):   a. Portfolio A r = 18% σ = 20%   Portfolio B r = 14% σ = 20%     Preference   multiple choice 1 Portfolio A Portfolio B Indeterminate     b. Portfolio C r = 21% σ = 22%   Portfolio D r = 19% σ = 16%     Preference:   multiple choice 2 Portfolio C Portfolio D Indeterminate     c. Portfolio E r = 10% σ = 16%   Portfolio F r = 10% σ = 10%     Preference:   multiple choice 3 Portfolio E Portfolio F Indeterminate

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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For each of the following pairs of investments, indicate which would always be preferred by a rational investor (assuming that these are the only investments available to the investor):

 

a. Portfolio A r = 18% σ = 20%
  Portfolio B r = 14% σ = 20%
 

 

Preference

 

multiple choice 1

  • Portfolio A
  • Portfolio B
  • Indeterminate

 

 

b. Portfolio C r = 21% σ = 22%
  Portfolio D r = 19% σ = 16%
 

 

Preference:

 

multiple choice 2

  • Portfolio C
  • Portfolio D
  • Indeterminate

 

 

c. Portfolio E r = 10% σ = 16%
  Portfolio F r = 10% σ = 10%
 

 

Preference:

 

multiple choice 3

  • Portfolio E
  • Portfolio F
  • Indeterminate

 
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