Given the choice between investing in a risk free asset or a risky asset with higher expected returns, the utility maximizing portfolio of a risk neutral or risk loving investor would never include the risk free asset.
A. I and II are true.
B. I is true, and II is false.
C. I is false, and II is true.
D. I and II are false.
Answer:B
Given the choice between investing in a risk free asset or a risky asset with higher expected returns, the utility maximizing portfolio of a risk neutral or risk loving investor would never include the risk free asset.
A. I and II are true. B. I is true, and II is false. C. I is false, and II is true. D. I and II are false.