The individual investor's optimal portfolio is designated by:
A)The point of tangency with the indifference curve and the capital allocation line.
B)The point of highest reward to variability ratio in the opportunity set.
C)The point of tangency with the opportunity set and the capital allocation line.
D)The point of the highest reward to variability ratio in the indifference curve.
E)None of the options.

Question

Quizplus · Accepted Answer

The indifference curve represents what is acceptable to the investor; the capital allocation line represents what is available in the market.The point of tangency represents where the investor can obtain the greatest utility from what is available.

The Individual Investor's Optimal Portfolio Is Designated By