Figure 27-1 The Following Figure Shows a Utility Function for Ren

Multiple Choice

Figure 27-1
The following figure shows a utility function for Ren.
-Refer to Figure 27-1. From the appearance of the utility function, we know that

A) if Ren owns a house, he would not consider buying fire insurance.
B) Ren would prefer to hold a portfolio of stocks with an average return of 6 percent and a standard deviation of 1 percent to a portfolio of stocks with an average return of 6 percent and a standard deviation of 5 percent.
C) Ren would prefer to hold a portfolio of stocks with an average return of 8 percent and a standard deviation of 5 percent to a portfolio of stocks with an average return of 6 percent and a standard deviation of 3 percent.
D) Ren is not risk averse.