Question: 4. Mynez, who is risk neutral (linear utility function, u(v) =v), faces the following investment decision on stocks A and B whose performance he believes

4. Mynez, who is risk neutral (linear utility function, u(v) =v),

4. Mynez, who is risk neutral (linear utility function, u(v) =v), faces the following investment decision on stocks A and B whose performance he believes to be related. If he invests, he must invest in both stocks. Stock B up $600 0.9 Stock A up 0.4 0.1 Stock B down -S300 Invest Stock B up 0.6 0.1/ $500 Stock A down 0.9 Stock B down -S400 Do not invest SO 1 a) Find Mynez's certainty equivalent for the deal b) Find Mynez's value of clairvoyance on the performance of Stock A c) Find Mynez's value of clairvoyance on the performance of Stock B d) Find Mynez's value of clairvoyance on the performance of stocks A and B together 4. Mynez, who is risk neutral (linear utility function, u(v) =v), faces the following investment decision on stocks A and B whose performance he believes to be related. If he invests, he must invest in both stocks. Stock B up $600 0.9 Stock A up 0.4 0.1 Stock B down -S300 Invest Stock B up 0.6 0.1/ $500 Stock A down 0.9 Stock B down -S400 Do not invest SO 1 a) Find Mynez's certainty equivalent for the deal b) Find Mynez's value of clairvoyance on the performance of Stock A c) Find Mynez's value of clairvoyance on the performance of Stock B d) Find Mynez's value of clairvoyance on the performance of stocks A and B together

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