An investor with utility function of wealth U(w) = 0.5*ln(w) + 1 What is this investor's attitude

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An investor with utility function of wealth

U(w) = 0.5*ln(w) + 1

What is this investor's attitude towards risk? How does he behave when he has more wealth as opposed to when he is poor?

(10 marks)

Related Book For answer-question

Financial Theory and Corporate Policy

ISBN: 978-0321127211

4th edition

Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri

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Posted Date: Apr 19, 2024 05:27 AM

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An investor with utility function of wealth U(w) = 0.5*ln(w) + 1 What is this investor's attitude

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Expert Answer:

The investors utility function of wealth is given by Uw 05lnw 1 where w represents wealth To determine the investors attitude towards risk we can anal... View the full answer

Financial Theory and Corporate Policy

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