Question: please show all work and formulas Use the following data in answering CFA Questions 4-6. Investor satisfaction with portfolio increases with expected return and decreases
Use the following data in answering CFA Questions 4-6. Investor "satisfaction" with portfolio increases with expected return and decreases with variance according to the "utility" formula: U=E(r)1/2A2 where A=4. 4. Based on the formula for investor satisfaction or "utility," which investment would you select if you were risk averse with A=4 ? (LO 5-4) 5. Based on the formula above, which investment would you select if you were risk neutral? (LO 5-4) 6. The variable (A) in the utility formula represents the: (LO54) a. Investor's return requirement. b. Investor's aversion to risk. c. Certainty equivalent rate of the portfolio. d. Preference for one unit of return per four units of risk
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