The indifference curves of two investors are plotted against a single budget line. Indifference curve A is shown as tangent to the budget line at a point to the left of indifference curve B's tangency to the same line.
A) Investors A and B will hold the same portfolio.
B) Investors A and B will have different portfolios of the same standard deviation.
C) Investors A and B will have different portfolios of the same rate of return.
D) Investors A and B will have different portfolios but have the same level of risk aversion.
E) Investor A will expect to earn a lower rate of return than investor B.

Question

Quizplus · Accepted Answer

Investor A's indifference curve is tangent to the budget line at a point to the left of investor B's tangency point, indicating that investor A is choosing a portfolio with a lower expected return compared to investor B.

The Indifference Curves of Two Investors Are Plotted Against a Single