An investor's degree of risk aversion will determine their ________.
A)optimal risky portfolio
B)risk-free rate
C)optimal mix of the risk-free asset and risky asset
D)capital allocation line

Question

Quizplus · Accepted Answer

An investor's degree of risk aversion will determine their optimal mix of the risk-free asset and risky asset in their portfolio. A risk-averse investor would prefer a higher allocation to the risk-free asset, whereas a risk-loving investor would prefer a higher allocation to the risky asset. The optimal mix is determined by the investor's individual risk preference and constraints, such as investment goals and time horizon.

An Investor's Degree of Risk Aversion Will Determine Their ________