Use the Below Information to Answer the Following Question U = E(r)? (A/2)s²

question 6

Multiple Choice

Use the below information to answer the following question. $\begin{array}{llcc}\text { Investment } &\text { Expected Return } E(r) &\text { Standard Deviation }\\1&0.12&0.13\\2&0.15&0.15\\3&0.21&0.16\\4&0.24&0.21\\\end{array}$

U = E(r) ? (A/2) s².
Which investment would you select if you were risk neutral?

• A) 1
• B) 2
• C) 3
• D) 4
• E) Cannot be determined from the information given.

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Definitions:

Residence Acquisition Debt

Mortgage debt incurred in acquiring, constructing, or substantially improving a principal residence, which is secured by the residence.

Fully Deductible

Expenses that can be subtracted in full from taxable income, reducing the total amount on which tax is calculated.

Adjusted Gross Income

involves a rephrased definition: it's the measure of income calculated from your gross income and allows for certain deductions, but before itemized or standard deductions.

Charitable Contributions

Donations or gifts made to qualifying nonprofit organizations, often eligible for a tax deduction.