Suppose an investor is considering investing $X in a one-month portfolio consisting of ONE risk-free asset and ONE ACTUAL (not synthetic) risky asset. Suppose r f = 2%, E [ r r ] = 18%, and σ r = 3%. Suppose the investor allocates 100% of her funds into the risky asset. Calculate the value of this investors' "Mean-Variance Utility Function" | M R S | at the "portfolio bundle".

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To solve this problem we need to calculate the meanvariance utility function for the investors portf... View the full answer