For each of the following pairs of investments, indicate which would always be preferred by a rational investor (assuming that these are the only investments available to the investor):
a)
Portfolio A r = 19% σ = 21%
Portfolio B r = 15% σ = 21%
Preference:
O Portfolio A
O Portfolio B
O Indeterminate
b)
Portfolio C r = 20% σ = 21%
Portfolio D r = 18% σ = 15%
Preference:
O Indeterminate
O Portfolio C
O Portfolio D
c)
Portfolio E r = 9% σ = 15%
Portfolio F r = 9% σ = 9%
Preference:
O Portfolio E
O Portfolio F
O Indeterminate
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