Question: Investment Expected return Standard deviation 1 0.10 0.25 2 0.12 0.30 3 0.14 0.40 4 0.16 0.45 U = E(r) - (A/2) 2, where A

Investment

Expected return

Standard deviation

1

0.10

0.25

2

0.12

0.30

3

0.14

0.40

4

0.16

0.45

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

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

A. Investment 1 B. Investment 2

C. Investment 3 D. Investment 4

Answer = ......................................................................

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