In the mean-standard deviation graph, which one of the following statements is true regarding the indifference curve of a risk-averse investor
A)It is the locus of portfolios that have the same expected rates of return and different standard deviations.
B)It is the locus of portfolios that have the same standard deviations and different rates of return.
C)It is the locus of portfolios that offer the same utility according to returns and standard deviations.
D)It connects portfolios that offer increasing utilities according to returns and standard deviations.
E)None of the options

Question

Quizplus · Accepted Answer

Indifference curves plot trade-off alternatives that provide equal utility to the individual (in this case, the trade-offs are the risk-return characteristics of the portfolios).

In the Mean-Standard Deviation Graph, Which One of the Following