TRUE OR FALSE:

1. Lesser risk tolerance means higher risk aversion.
2. Indifference curves are defined in terms of a trade-off between expected rate of return and variance of the rate of return.
3. An indifference curve plots the combination of risk-return pairs that an investor would accept to maintain a given level of utility.
4. The indifference curve for risk neutral investors are horizontal because they only care about the risk of an asset, therefore they are indifferent no matter how much return an asset can offer.
5. Risk tolerance is a measure of one's ability to take on risk in order to achieve investment objectives.
6. The more risk-averse investor will have an indifference curve that lies on the left of the indifference curve of less risk-averse investors.
7. A risk averse investor is an investor that is not a risk taker.
8. A risk loving investor will always earn higher utility from investing in a risky asset than a risk averse investor only if the risky asset pays a higher return.
9. Risk seeking investors also require higher returns as they invest in riskier assets.
10. Less risk averse investors show a higher slope since their preference is to take on higher risks given higher return.
11. The utility function shows the relationship between the expected return of an asset against the risk tolerance of the investor magnified by the riskiness of an asset or portfolio.
12. A risk averse investor will always choose the least risky asset with the lowest return.
13. The risk-loving investor's indifference curve exhibits a negative slope, implying that the risk-lover is happy to substitute risk for return.
14. Utility theory, as adopted in finance, measures the relative satisfaction of an investor from investing in different assets and portfolios.