# Utility curve

Hi all,

According to Markowitz, an investor’s optimal portfolio is determined where the:

“The optimal portfolio for an investor is determined as the point where the investor’s highest utility curve is tangent to the efficient frontier.”

my question is - how many utility curves do each investor have? and what causes them to have multiple?

Many thanks

Infinitely many: one for each level of utility.

There’s a curve for all of the risk/return combinations that have a utility of 1.

There’s a curve for all of the risk/return combinations that have a utility of 2.

There’s a curve for all of the risk/return combinations that have a utility of 2.25.

There’s a curve for all of the risk/return combinations that have a utility of \sqrt{2\pi}.

And a whole lot more.

thank you. this was the missing link i didn’t understand but now got it.

thank you

My pleasure.