Given one stock and its expected returns given three possible states of the economy, determine the standard deviation of returns for this stock

State of Economy	Probability of state	Return if state occurs
Good	10%	16%
Average	60%	11%
Poor	30%	-8%

5.80%

9.15%

8.38%

9.87%

7.34%

Suppose an investor has the following utility function:

U=E(r) -1.5^2

To maximize his utility, which of the following assets should the investor select?

E(r) =10% , =15%

E(r) = 10%, =10%

E(r) = 5%, =10%

E(r) = 12%, =20%

E(r) = 8%, =10%

Louis Litt, a portfolio manager, is working with a client. Louis has access to a risky portfolio that will generate an expected return of 15% and a standard deviation of returns of 15%. In addition, the risk-free rate is 6%. Through a series of questions, Louis has determined that his client is indifferent between the risky portfolio and the risk-free asset. Given that the investor's utility function isU=E(r) - ()2. What is the value of the investor's coefficient of risk-aversion (A)?

7

8

0

6

4