An investor makes decisions using quadratic utility U = E[r] Ao with a risk-aversion coefficient...

 

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An investor makes decisions using quadratic utility U = E[r] — Ao² with a risk-aversion coefficient of 3. They have found a "baseline" asset with an expected return of 0.24 and standard deviation of 0.16. They are also considering investing in an "alternate" asset with a standard deviation of 0.42. What expect return does this "alternate" asset need to provide to make the investor indifferent between it and the "baseline" asset? Give you answer as a decimal to four decimal places. An investor makes decisions using quadratic utility U = E[r] — Ao² with a risk-aversion coefficient of 3. They have found a "baseline" asset with an expected return of 0.24 and standard deviation of 0.16. They are also considering investing in an "alternate" asset with a standard deviation of 0.42. What expect return does this "alternate" asset need to provide to make the investor indifferent between it and the "baseline" asset? Give you answer as a decimal to four decimal places.