The exact indifference curves of different investors
A) cannot be known with perfect certainty.
B) can be calculated precisely with the use of advanced calculus.
C) although not known with perfect certainty,do allow the advisor to create more suitable portfolios for the client.
D) a and c.
E) none of these.

Question

Quizplus · Accepted Answer

Indifference curves represent an individual's preferences for different combinations of two goods. As individuals have different preferences, the exact indifference curves of different investors cannot be known with perfect certainty. However, an advisor can use the concept of indifference curves to create more suitable portfolios for clients. Therefore, options A and C are correct, making option D the best choice. Option B is incorrect as advanced calculus may assist in determining the optimal bundle, but it cannot precisely calculate the exact indifference curve.

The Exact Indifference Curves of Different Investors