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

Two assets have the following expected returns and standard deviations when the risk-free rate is 5%:

Asset A E(r) = 10% SD = 20%

Asset B E(r) = 15% SD = 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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