Question: Investment Expected Return Standard deviation 1 12% 30% 2 15% 50% 3 21% 16% 4 24% 21% U = E(r) - 1/2*A*^2 A. On the

Investment Expected Return Standard deviation
1 12% 30%
2 15% 50%
3 21% 16%
4 24% 21%

U = E(r) - 1/2*A*^2

A. On the basis of the utility formula above, which investment would you select if you were risk averse with A = 4?

B. On the basis of the utility formula above, which investment would you select if you were risk neutral?

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