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An investor's degree of risk aversion will determine his or her ________. A. optimal risky portfolio B. risk-free rate C. optimal mix of the risk-free asset and risky asset D. capital allocation line
An investor's degree of risk aversion will determine his or her ________. A. optimal risky portfolio B. risk-free rate C. optimal mix of the risk-free asset and risky asset D. capital allocation line
Answer:Option (C) is correct.Explanation:From the given options, we can state that an investor's degree of risk aversion will determine his/her optimal mix of the risk-free asset and risky asset.In discipline such as finance and economics, risk aversion is known as the behavior of individual, which, when are exposed to certain uncertainty, tends to attempt to decrease that uncertainty. It is also referred to as hesitation of an individual to acknowledge to the circumstance that consists of an unknown payoff instead of choosing another situation that has a more predictable result....
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