Question: Bob has preferences given by U=E[r]0.5A2. Bob is considering picking a single investment from the following choices: - Choice 1: Investment A has an expected

Bob has preferences given by U=E[r]0.5A2. Bob is considering picking a

Bob has preferences given by U=E[r]0.5A2. Bob is considering picking a single investment from the following choices: - Choice 1: Investment A has an expected return of 0.10 and a return volatility of 0.20 - Choice 2: Investment B has an expected return of 0.15 and a return volatility of 0.22 - Choice 3: Investment C has an expected return of 0.20 and a return volatility of 0.30 - Choice 4: Investment D has an expected return of 0.25 and a return volatility of 0.35 Which investment should Bob choose if A=2 ? Investment 2 Investment 3 Investment 1 Investment 4

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