In a return-standard deviation space, which of the following statements is(are)true for risk-averse investors? (The vertical and horizontal lines are referred to as the expected return-axis and the standard deviation-axis, respectively.) I) An investor's own indifference curves might intersect.
II) Indifference curves have negative slopes.
III) In a set of indifference curves, the highest offers the greatest utility.
IV) Indifference curves of two investors might intersect.

Question

Quizplus · Accepted Answer

Indifference curves represent levels of utility for investors. For risk-averse investors, higher indifference curves represent higher utility (III). Indifference curves of different investors can intersect because they have different risk-return preferences (IV).

In a Return-Standard Deviation Space, Which of the Following Statements