Session 12: Portfolio Management
Reading 52: Portfolio Risk and Return: Part I
LOS d: Explain risk aversion and its implications for portfolio selection.
A stock has an expected return of 4% with a standard deviation of returns of 6%. A bond has an expected return of 4% with a standard deviation of 7%. An investor who prefers to invest in the stock rather than the bond is best described as:
Given two investments with the same expected return, a risk averse investor will prefer the investment with less risk. A risk neutral investor will be indifferent between the two investments. A risk seeking investor will prefer the investment with more risk.
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发表于 2011-3-24 15:41
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