Question: Based on the formula for investor satisfaction or utility, which investment would you select if you were risk averse with A = 4? Investor satisfaction

Based on the formula for investor satisfaction or "utility," which investment would you select if you were risk averse with A = 4?

Investor "satisfaction" with portfolio increases with expected return and decreases with variance according to the "utility" formula: U = E(r) - Â½ AÏƒ2 where A = 4.

Expected Return, E(r) .12 .15 21 24 Investment Standard Deviation, .16 21

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