Use the Below Information to Answer the Following Question U = E(r ) (A/2)s2,where a = 4

question 45

Multiple Choice

Use the below information to answer the following question. $$\begin{array} { l c c } \text { Investment } & \begin{array} { c } \text { Expected } \\\text { Return E(r) }\end{array} & \begin{array} { c } \text { Standard } \\\text { Deviation }\end{array} \\1 & 0.12 & 0.3 \\2 & 0.15 & 0.5 \\3 & 0.21 & 0.16 \\4 & 0.24 & 0.21 \\\hline\end{array}$$ U = E(r ) (A/2) s2,where A = 4.0. The variable (A) in the utility function represents the

• A) investor's return requirement.
• B) investor's aversion to risk.
• C) certainty-equivalent rate of the portfolio.
• D) minimum required utility of the portfolio.

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