Rational risk-averse investors will always prefer portfolios _____________.
A) located on the efficient frontier to those located on the capital market line
B) located on the capital market line to those located on the efficient frontier
C) at or near the minimum variance point on the efficient frontier
D) that are risk-free to all other asset choices

Question

Quizplus · Accepted Answer

Rational risk-averse investors prefer portfolios on the capital market line because it represents the best risk-return trade-off, combining the risk-free asset with the market portfolio, which is on the efficient frontier.

Rational Risk-Averse Investors Will Always Prefer Portfolios _____________