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Suppose an Individual Has $100 to Invest

question 43

Essay

Suppose an individual has $100 to invest.Two assets are available.One asset will yield a return of 10%,while the other risky asset will yield 0% with probability .5 and 21% with probability .5.Suppose the investor's utility function is given by U(x)= ln(x)where x is the wealth after investing (assume she is investing for just one period).How much will she invest in the risky asset?

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Definitions:

Electron Transport Chain

A series of complexes that transfer electrons from electron donors to electron acceptors via redox reactions, and couples this electron transfer with the transfer of protons (H+ ions) across a membrane.

Glycolysis

The metabolic pathway that breaks down glucose to pyruvate, generating energy and pyruvate molecules, occurring in the cytoplasm of cells.

Eukaryotes

Organisms whose cells contain a nucleus and other membrane-bound organelles, including animals, plants, fungi, and protists.

Phosphorylation

The introduction of a phosphate group into an organic molecule. See kinases.

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