Question: Suppose that, over a given time interval, we estimate the rate of return parameters for Walmart and Commonwealth Edison stock as: Walmart: mean = .
Suppose that, over a given time interval, we estimate the rate of return parameters for Walmart and Commonwealth Edison stock as:
Walmart: mean variance
ComEd: mean variance
Does an investor with risk aversion prefer Walmart or ComEd? How about an investor with risk aversion Find a value for the risk aversion such that investors above that value prefer ComEd and investors below that value prefer Walmart.
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