Investor indifference curves Characteristics

Investor indifference curves Characteristics

Investor indifference curve characteristics may be explained in terms of investor choice, investor decision, high return and low risk, high return and relatively low risk, high return and high risk.

1.    Investor Choice

Investor indifference curve show the investor choice, or perforce. This preference may or may not be available in the market.

2.    Investor Decision

Investor decision would be the meeting point of investor choice (investor indifference curve) and investment opportunities (frontier curve).

3.    High Return and Low Risk curve

First preference of investor would be to get high return with low risk. If such opportunity available (this curve touches the frontier curve), then it would be the best choice.

4.    High Return & relatively low risk

Second preference of investor is high return with relatively low risk. This curve would fall below than above curve and therefore second choice for investor.

5.    Low Return and High Risk

Third preference would be low return with high risk; this is least preferred option for investor. but in some cases it is opted because , this is the only option available ( this indifference curve touches the frontier curve).