Question: Suppose the risk-free rate is 5%. The expected return and standard deviation of a risky asset are 10% and 20%, respectively. If an investor has

Suppose the risk-free rate is 5%. The expected return and standard deviation of a risky asset are 10% and 20%, respectively. If an investor has a risk aversion coefficient of A=2, what is the optimal fraction of the money that she invests in the risky asset? 42.5% 20% 30% 62.5%

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