Question: Assume you have a utility function which takes the form (wealth).You are offered the chance to win a sports car which is worth 38,000. Tickets

Assume you have a utility function which takes the form (wealth).You are offered the chance to win a sports car which is worth 38,000. Tickets to take part in the gamble cost 100. What is the expected utility of the gamble if there is a 2% chance of winning the car with each ticket and you buy ten tickets?

When an investor selects the optimal combination of the risk-free asset and the risky portfolio, the more risk averse the investor the higher the risk-return utility curve will always be, at the point of tangency with the capital market line. Is this right?

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