624 K 18% Owe 7 stree 0.2 Expected return 0.1 0.3 0.4 B D E 1 F G H 1 3 Suppose the Nike and Starbucks stocks (and the risk-free rate) have the following statistics. 4 5 E[ re] 28% 0.25 6 E[rstarbucks] 12% Orbucks 21% 4% Perbis 0 8 9 0.15 10 Starbocks 11 0.1 12 13 0.05 14 Risk-free 15 0 16 0.2 17 Standard deviation 18 19 20 There are two investors --Blue and Gray--and their degrees of risk aversion A are 2 and 8, respectively. 21 Assume they have the following utility function. 22 1 23 U= = E[r] Ao? 04 25 The chart shows Blue and Gray's indifference curves, respectively. 26 Which of the following statements about Blue and Gray is false? 27 28 A Gray is more risk-averse than Blue. 29 B Gray prefers Starbucks to Nike. Blue prefers Nike to Starbucks. 31 D None of the above B2 33 DA