Question
Investors can invest in a risk-free asset and a risky portfolio constructed out of 3 risky assets. Sara is more risk averse than Brian. Both
Investors can invest in a risk-free asset and a risky portfolio constructed out of 3 risky assets. Sara is more risk averse than Brian. Both Sara and Brian make the optimal portfolio choice. Which of the following statements is true?
| Saras optimal complete portfolio has a higher Sharpe ratio than that of Brians. | ||
| Sara and Brian will pick different optimal risky portfolios.
| ||
| Compared to Brian, Sara puts a smaller fraction of her total investment money into the risk-free asset.
| ||
| Saras optimal complete portfolio will have a lower standard deviation compared to that of Brians. |
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Financial Management Theory And Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
10th Edition
0030329922, 9780030329920
