1. The concept of marginal utility for a risk-averse investor is best described by which of the following statements?
The utility function of a risk-averse investor is concave because as a person enjoys greater levels of net wealth additional dollars take on less value from a well-being standpoint.
The utility function of a risk-averse investor is a straight 90-dgree line because each marginal dollar of benefit is equal to earlier dollars.
The utility function of a risk-averse investor is convex because as a person enjoys greater levels of net wealth additional dollars take on greater marginal value.
The utility function of a risk-averse investor is a straight 45-degree line because each marginal dollar of benefit is equal to earlier dollars.
2. Under the Separation Property of Portfolio Optimization:
The Capital Market Line reflects the client’s Risk Aversion level
Risky portfolios should reflect the Risk Aversion level for each investor
There is only 1 theoretic optimal Risky portfolio for all investors
The minimum variance point on the Efficient Frontier reflects the optimal Risky portfolio