Indifference Curves for Different Risk Aversion Levels
Compare four investors (W, X, Y, Z) with risk aversion coefficients A = 2, 0.5, 0, and −0.5 simultaneously on the same σ–E(R) diagram. All curves originate at the same utility intercept (0, U₀), then diverge as σ increases — steep parabolas for risk-averse investors, a flat line for the risk-neutral investor, and a downward parabola for the risk-seeker. Toggle the Capital Allocation Line to compare optimal portfolio allocations y* = (ERm − Rf) / (A × σm²) across investor types.
Fundamental