Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![Assuming your utility function U = E(r) - Ao². Consider the investments shown in
the table. If your risk aversion coefficient is -2, which investment would you choose?
Investment E[r]
#1
#2
#3
#4
#2
#3
#4
#1
12%
15%
15%
24%
σ
40%
40%
30%
40%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F848777ae-06cc-4632-9f10-c31123581434%2F07fe9623-45ac-4334-b35e-75161ff0cb3d%2Fzs6mzb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Assuming your utility function U = E(r) - Ao². Consider the investments shown in
the table. If your risk aversion coefficient is -2, which investment would you choose?
Investment E[r]
#1
#2
#3
#4
#2
#3
#4
#1
12%
15%
15%
24%
σ
40%
40%
30%
40%
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