Assume an Investor with the Following Utility Function: U =

question 17

Multiple Choice

Assume an investor with the following utility function: U = E(r) − 0.60(s²) . To maximize her expected utility, she would choose the asset with an expected rate of return of _______ and a standard deviation of ________, respectively.

• A) 12%; 20%
• B) 10%; 15%
• C) 10%; 10%
• D) 8%; 10%

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Definitions:

Personal

Refers to individual or private concerns, characteristics, or aspects distinct to a person.

Physiological

Relating to the normal functions of living organisms and their parts, including all physical and chemical processes.

Self-concept

An individual's perception of themselves, shaped by their thoughts, feelings, and experiences.

Core Value

Fundamental beliefs or guiding principles that dictate behavior and action within an organization or individual, helping to shape its culture and decision-making.