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An investor has the utility function: U = E(r) - (A/2)o2 where A = 4. Which of the following statements are correct? Investment Expected Return Standard Deviation 1 0.12 0.3 0.15 2 |0.5 3 |0.21 0.16 14 0.24 0.21 Investment 3 gives the highest utility Investment 2 gives the highest utility Both investment 1 and 2 give negative utility Investment 4 gives the lowest utility U Investment 1 gives the highest utility.

An investor has the utility function: U = E(r) - (A/2)o2 where A = 4. Which of the following statements are correct? Investment Expected Return Standard Deviation 1 0.12 0.3 0.15 2 |0.5 3 |0.21 0.16 14 0.24 0.21 Investment 3 gives the highest utility Investment 2 gives the highest utility Both investment 1 and 2 give negative utility Investment 4 gives the lowest utility U Investment 1 gives the highest utility.

Essentials Of Investments
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
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[MULTIPLE] An investor has the utility function: U = E(r) - (A/2)o2 where A = 4. Which of the following statements are correct? Investment Expected Return Standard Deviation 1 0.12 0.3 0.15 0.5 0.21 0.16 14 0.24 0.21 Investment 3 gives the highest utility Investment 2 gives the highest utility Both investment 1 and 2 give negative utility Investment 4 gives the lowest utility Investment 1 gives the highest utility. 3.
Transcribed Image Text:[MULTIPLE] An investor has the utility function: U = E(r) - (A/2)o2 where A = 4. Which of the following statements are correct? Investment Expected Return Standard Deviation 1 0.12 0.3 0.15 0.5 0.21 0.16 14 0.24 0.21 Investment 3 gives the highest utility Investment 2 gives the highest utility Both investment 1 and 2 give negative utility Investment 4 gives the lowest utility Investment 1 gives the highest utility. 3.
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