Suppose Diana has a mean$-$variance utility function: $U=E(r)-1$

$2A2.$ Diana

risk aversion parameter, $A,$ is equal to $3\mathrm{.}0.$ Diana is given a choice between the

following alternative portfolios:

Portfolio Expected Return Standard Deviation

Which does Diana like best? Which does she like the least? Rank all the

portfolios from most preferred to least preferred.

b$)$ Diana has a mean$-$variance utility function: $U=E(r)-1$

$2A2,$ where A stands

for her risk$-$aversion parameter. Diana can invest in a portfolio with an expected

return of $9\%$ and a standard deviation of $14\%,$ or she can be T$-$Bills which have a

risk$-$free $5\%$ rate of return. What is the maximum level of risk aversion for which

the risky portfolio is preferred to T$-$Bil