Use this information to answer the next two questions:

Investor	Risk Premium on Portfolio	Variance of Portfolio
A	13.5%	4.8%
B	12.8%	5.5%

What are the degrees of risk aversion (A) for Investors A and B who put all entire wealth in the following portfolio?

	Risk Aversion for A= 2.8125 and Risk Aversion for B = 2.3273
	Risk Aversion for A = 0.5859 and Risk Aversion for B = 0.4231
	Risk Aversion for A = 2.9514 and Risk Aversion for B = 2.1245
	Risk Aversion for A = 3.2154 and Risk Aversion for B = 3.8175

What is the relationship between risk premium on portfolio and degree of risk aversion?

	Investor A will require lower risk premium on portfolio due to higher degree of risk aversion.
	Investor A will require higher risk premium on portfolio due to higher degree of risk aversion.
	Investor B will require lower risk premium on portfolio because of higher degree of risk aversion
	The risk premium does not depend on the investors' degree of risk aversion.