Question: Two assets have the following expected returns and standard deviations when the risk-free rate is 5%: Asset A E(A) = 10% STD(A) = 20% Asset

Two assets have the following expected returns and standard deviations when the risk-free rate is 5%: Asset A E(A) = 10% STD(A) = 20% Asset B E(B) = 15% STD(B) = 27% An investor with a risk aversion of A = 3 would find that _________________ on a risk-return basis.

A. Only Asset A is acceptable.

B. Only Asset B is acceptable.

C. Neither asset A nor asset B is acceptable.

D. Both asset A and asset B are acceptable.

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