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:

Males and Females

The two primary categories of sex distinction in organisms, based on reproductive organs and functions.

Defensive Coping

Psychological strategies used unconsciously to protect oneself from anxiety, societal condemnation, or feelings of inferiority.

Successful Adjustment

The effective adaptation or coping of an individual in response to new or challenging circumstances, leading to a state of psychological well-being.

Defense Mechanisms

Psychological strategies employed unconsciously to protect oneself from anxiety arising from unacceptable thoughts or feelings.