Notes for Level I CFA® Program

R41 Portfolio Risk and Return Part I

5.4. Optimal Investor PortfolioWatch Video Play

To identify the optimal investor portfolio, we must consider the investor’s risk preferences. The utility of each investor is best represented by his indifference curves. The optimal investor portfolio is the point at which the investor’s indifference curve is tangential to the optimal allocation line. Portfolio C in the exhibit below is the optimal investor portfolio.
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