Question

Holding x Formulax G sk neut x Portolio Fin II Exe htpse x x OE Mome X ETF-h Woek 2 C fastreg sbs su se/kursmaterial/FIN-I1%207.5/DocumentationExercises/Fin %20IN20Exercise %20set %202 pd FIN-Google Docs SUAS Regisration sither loP Sem 1-Macro- dv Apps a Amaron.com Hub... For problems 2 through 5: Investment Expected Return E(r) Standard Deviation 1 30% 12% 2 50% 15% 3 21 % 16% 4 24% 21% E(r)-a, where A 4.0 Utility function: U 2. Based on the utility function above, which investment would you select? 3. Which investment would you select if you were risk neutral? Which investment would you select if you were risk lover (where A-2.0)? 4. An investor decides to create a portfolio by investing 40 % in an investment 1 and 60 % in investment 3. The correlation coefficient between the investment returns is 0.25. 5. HT19 FIN 2 Po... HT19 FN 2 Po.. oSFEVT20194 pdt FIN2 Stenko.pot Show Al

hello please help me calculate these

Answer 1

Ans -

Part (A) 2. Based on risk aversion investor he would choose investment 3 because it has higher utility. A risk averse investor assumes more risk when gets more return.

Part (B)3. A risk neutral investor has utility of 0. He always select investment with higher return i.e INVESTMENT 4

Part (C)4. A risk lover is person who assumes more risk. He always wanted to take more risk and higher return. So he choose INVESTMENT 2 because utility is high at this point

PART(D)5. It is done on separate paper.

Ans A-4 Standaid Dewialuon Investment - o.06 301 -0.35 501 151 O.1588 16/ O1518 E CH) A 3 4630)2 (009) 0.10 O18 -0.06 U 15/ Coar) 0.1S O'IS - 0'50 (0. 16) U 1 a(0.a256) O'15 880 % Coaij Tv U4 D1518

A=- 3 S.D Panty Jovastmant 0 21 301 121 1 5/ 60 o.40 0.2356 Q41 0'2841 U O'21 01 11. 17 U EC Lo s) 15 0-15 + o25 040 ০ ২। + & 3.56 241 0১५ । । (०.०५५।)] o841

3 Pents in and 607 in 467 1nuutment + EN) o6 (014) 4.8 17.4 l,6 SD waghtiSesnity wheu pu IT Sewi'y wugh St Cordatwn

Co42 0-3) to6 (0-16)2 t xox0 to3 xo1 xe2 0.0144o + O0099a to00546 o.02938 O1713 1713/