A portfolio has an expected rate of return of 23 percent and a standard deviation of 19 percent. The risk-free rate is 4 percent. An investor has a risk aversion, A, of 4 and assesses risky assets as if her risk attitude reflects the following utility function:  U = E(r) - 12Aσ².  What is the utility of the risky portfolio? 

Given the utility function below, which investment would you select and why? 

Answer rating: 100% (QA)

To find the utility of the risky portfolio using the given utility function UEr12A2UEr12A2 we first ... View the full answer