Choose all the correct options

Question

The graph below combines the efficient frontier with the indifference curves for two different investors,

Accepted Answer

The backward bend in the efficient frontier is due to less than perfect correlation between portfolio assets.

Answer

Investor X would be better off moving to indifference curve U(X)1 and Portfolio C because of the higher return on that portfolio.

Answer

Investor X is less risk-averse than Investor Y.

Answer

Portfolio B is an optimal portfolio, Portfolio A is suboptimal.

The graph below combines the efficient frontier with the indifference curves for two different investors, X and Y (represented by U(X) and U(Y)). The letters A, B, C, and D represent four distinct portfolios.