Measuring Utility One way to quantify utility: U = E(r) - ½ Aσ² See the table below: Calculate the U score for each value of A. E(r) 4% 5.1% 8.2% 12.3% 0% 6% 14% 22% A=1 0.0400 0.0492 0.0722 0.0988 A=3 0.0400 0.0456 0.0526 0.0504 A=5 0.0400 0.0420 0.0330 0.0020
Measuring Utility One way to quantify utility: U = E(r) - ½ Aσ² See the table below: Calculate the U score for each value of A. E(r) 4% 5.1% 8.2% 12.3% 0% 6% 14% 22% A=1 0.0400 0.0492 0.0722 0.0988 A=3 0.0400 0.0456 0.0526 0.0504 A=5 0.0400 0.0420 0.0330 0.0020
Chapter11: Venture Capital Valuation Methods
Section: Chapter Questions
Problem 14DQ
Related questions
Question
Please correct answer and don't use hand raiting
Transcribed Image Text:Measuring Utility
One way to quantify utility: U = E(r) - ½ Aσ²
See the table below: Calculate the U score for each value of A.
E(r)
4%
5.1%
8.2%
12.3%
0%
6%
14%
22%
A=1
0.0400
0.0492
0.0722
0.0988
A=3
0.0400
0.0456
0.0526
0.0504
A=5
0.0400
0.0420
0.0330
0.0020
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning