Find the first order condition for Cara's optimization problem. Predictably, Cara's utility function exhibits constant absolute...

   

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Find the first order condition for Cara's optimization problem. Predictably, Cara's utility function exhibits constant absolute risk aversion u(C) = 1 - e-aC. Show that the number of shares she buys does not depend on her endowment W. Suppose that Cara has a twin sister, Cora, who faces the same optimization problem but whose utility function instead exhibits constant relative risk aversion u(C) = Show that the number of shares she buys is proportional to her endowment W. = C1-P 1-p 3 w/ prob. 2 P1 P₁ = 3 1 0 w/ prob. 3 max u(Co) + SE[u(C1)] § s.t. CoWεPo = C₁ = W +εP₁ Find the first order condition for Cara's optimization problem. Predictably, Cara's utility function exhibits constant absolute risk aversion u(C) = 1 - e-aC. Show that the number of shares she buys does not depend on her endowment W. Suppose that Cara has a twin sister, Cora, who faces the same optimization problem but whose utility function instead exhibits constant relative risk aversion u(C) = Show that the number of shares she buys is proportional to her endowment W. = C1-P 1-p 3 w/ prob. 2 P1 P₁ = 3 1 0 w/ prob. 3 max u(Co) + SE[u(C1)] § s.t. CoWεPo = C₁ = W +εP₁