Which of the following statements is true?
A)The objective of risk-indifferent FI managers is to minimise portfolio risk regardless of the portfolio's return.
B)The objective of risk-indifferent FI managers is to minimise portfolio risk in turn for higher returns on the portfolio.
C)The objective of risk-averse FI managers is to minimise portfolio risk in turn for higher returns on the portfolio.
D)The objective of risk-averse FI managers is to minimise portfolio risk regardless of the portfolio's return.

Question

Quizplus · Accepted Answer

Risk-averse FI managers aim to minimize portfolio risk regardless of the portfolio's return, as they prioritize the preservation of capital over high returns. On the other hand, risk-indifferent FI managers are willing to accept a certain level of risk to achieve higher returns, while risk-seeking FI managers actively seek out higher-risk investments in the hope of achieving higher returns. Choice A and B are incorrect because they both refer to risk-indifferent FI managers rather than risk-averse FI managers.

Which of the Following Statements Is True