A Portfolio Has an Expected Rate of Return of 0

question 4

Multiple Choice

A portfolio has an expected rate of return of 0.15 and a standard deviation of 0.15.The risk-free rate is 6 percent.An investor has the following utility function: U = E(r) - (A/2) s².Which value of A makes this investor indifferent between the risky portfolio and the risk-free asset?

• A) 5
• B) 6
• C) 7
• D) 8
• E) none of these

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Definitions:

Progressive Era

A period of widespread social activism and political reform in the United States from the 1890s to the 1920s, aimed at eliminating problems caused by industrialization, urbanization, and corruption.

Ballot Reform

Changes and improvements made to the voting process to ensure fairness, accuracy, and accessibility in elections.

Electorate

The body of individuals entitled to vote in an election, representing the collective decision-making capacity in a democratic society.

Disfranchisement

The revocation or denial of the right to vote to a person or group, often used as a means to suppress the political voice of minorities or opponents.