Consider an investor with risk aversion of A = 4. The investor owns a portfolio with expected return of 12.00% and standard deviation of 0.18%. If an alternative portfolio had an expected return of 14.00%, what standard deviation would it need for the investor to be indifferent? The standard deviation would need to be %. Round your answer to the nearest two decimal places. Should the investor switch to a portfolio with expected return of 10% and standard deviation of 12%? ---Select---

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
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EOC Problems 6-18
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◆ Question 10 of
Problem 6-18 Utility
Consider an investor with risk aversion of A = 4. The investor owns a portfolio with expected return of 12.00% and standard deviation of 0.18%.
If an alternative portfolio had an expected return of 14.00%, what standard deviation would it need for the investor to be indifferent?
The standard deviation would need to be
%. Round your answer to the nearest two decimal places.
Should the investor switch to a portfolio with expected return of 10% and standard deviation of 12%?
---Select--- ✰
✓ ---Select---
Yes
No
Transcribed Image Text:EOC Problems 6-18 eBook ◆ Question 10 of Problem 6-18 Utility Consider an investor with risk aversion of A = 4. The investor owns a portfolio with expected return of 12.00% and standard deviation of 0.18%. If an alternative portfolio had an expected return of 14.00%, what standard deviation would it need for the investor to be indifferent? The standard deviation would need to be %. Round your answer to the nearest two decimal places. Should the investor switch to a portfolio with expected return of 10% and standard deviation of 12%? ---Select--- ✰ ✓ ---Select--- Yes No
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