Consider utility:

U = E(r) - (A/2)s2 , where A = 2.0.

Based on the utility function above, which investment would you select?

Investment Expected Return Standard Deviation

1 0.13 0.20

2 0.20 0.12

3 0.22 0.16

4 0.25 0.21

Select one:

a)

Investment 4

b)

cannot tell from the information given

c)

Investment 1

d)

Investment 2

e)

None of the alternatives.

f)

Investment 3