Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a portfolio has an expected rate of return of 10%

A portfolio has an expected rate of return of 10% and a standard deviation of...

80.2K

Verified Solution

Question

Finance

A portfolio has an expected rate of return of 10% and a standard deviation of 16%. The risk-free rate is 2%. 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. 6.25 B. 5.75 C. 6.75 D. 8 E. 5

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Given the technology today, (in-vitro fertilization, assisted reproductive technologies, surrogacy, donor eggs, donor sperm, etc..) families are...

Psychology
Q

In Silberman, the author gives ideas for fun activities to engage your employees with - including...

General Management
Q

) Genosis Metals provided the following information for last month:             Sales                              $20,000             Variable costs                    8,000             Fixed costs                        4,000             Operating income            $8,000 If sales reduce to half the amount...

Accounting
Q

The normally code for enzymes proteins that are important in anabolism or catabolism A promoter...

Biology
Q

If the length of a rectangle is increased by 6 inches, the area becomes 135...

Basic Math
Q

A graphing calculator is recommended The displacement in centimeters of a particle s moving back...

Calculus
Q

Which of the following entries would be required to establish a $500 petty...

Accounting
Q

Please help create journal and other reqs

Accounting
Q

State the various types of business organizations that exist and explain the distinguishing characteristics of...

Accounting
Q

PA5-5(Algo) Predicting Cost Behavior, Calculating Contribution Margin and Contribution Margin Ratio, Calculating Profit [LO 5-1,5-5]...

Accounting
Q

During 2019 (its first year of operations) and 2020, Fieri Foods used the FIFO inventory...

Accounting
Q

Here is some price information on Fincorp stock. Suppose that Fincorp trades in a dealer...

Finance