Assume that investment A offers the portfolio combination of investment return I 1 with probability (0

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Assume that investment A offers the portfolio combination of investment return I1 with probability α (0 < α < 1) and investment return I2 with probability

(1 - α). What is the expected utility of investment A, or ¯U (A)? What is the actuarial value of A in dollars, or ¯I (A)?

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