Suppose that A > B > C > D and that the utilities of these alternatives satisfy

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Suppose that A > B > C > D and that the utilities of these alternatives satisfy U(A) + U(D) = U(B) + U(C). Is it true that U(1/2B + 1/2C) is greater than U(1/2 A + 1/2D) because the former has a smaller variance? Why or why not?

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Financial Theory and Corporate Policy

ISBN: 978-0321127211

4th edition

Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri

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Question Posted: Apr 26, 2016 08:23 AM

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Suppose that A > B > C > D and that the utilities of these alternatives satisfy

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We are given that A B C D Also we know that UA UD UB UC Transposing we have UA UB UC ...View the full answer

Financial Theory and Corporate Policy

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