Question: Based on the investment information given below, answer the following questions. Returns and standard deviations are both expressed as percent per year. When using the

Based on the investment information given below, answer the following questions. Returns and standard deviations are both expressed as percent per year. When using the utility formula, however, returns and standard deviations must be expressed in decimals.

Based on the investment information given below, answer the following questions.

1) Which investment will a risk-averse investor with a risk aversion coefficient of 4 choose?

2) Which investment will a risk-averse investor with a risk aversion coefficient of 2 choose?

3) Which investment will a risk-neutral investor choose?

4) Which investment will a risk-loving investor choose?

Investment Standard Deviation Expected Return EG) 1 2 3 12% 15% 21% 24% 30% 35% 40% 45% 4

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