Suppose an investor could get a 3% rate of return with no risk, but higher returns require more risk at a constant rate. Draw an investor opportunity schedule and show where a person might maximize utility. Does a person accept some risk?
Suppose an investor could get a 3% rate of return with no risk, but higher returns require more risk at a constant rate. Draw an investor opportunity schedule and show where a person might maximize utility. Does a person accept some risk?
Obviously homework... because this situation doesn't exist today.
What do you think and explain?
Does a person accept some risk?
You accept risk by living, only dead people have no risk.
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