Assume an Investor with the Following Utility Function: U =

question 3

Multiple Choice

Assume an investor with the following utility function: U = E(r) - 3/2(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%
• E) none of these

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Definitions:

Normal Approximation

An approach in statistics for estimating the probability of different outcomes under the assumption that the data follow a normal distribution.

Symmetrical Distribution

A distribution where the left and right sides are mirror images of each other, indicating equal distribution around the central point.

University Faculty

University faculty refers to the professors, lecturers, and academic staff responsible for teaching courses and conducting research within a college or university.

Expected Number

The anticipated count or amount in a set of occurrences or outcomes based on probability.