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Assume an investor with the following utility function: U = E(r) - 3/2(s2). If the investors...

Assume an investor with the following utility function: U = E(r) - 3/2(s2).

If the investors pportfolio has an expected return of 10.9 and standard deviation of 26.4. What is the investors utility?

Solutions

Expert Solution

Utility Function = E(r) - 3/2(s2)

= 0.109 - 1.5(0.264)2

= 0.109 - 0.1045 = 0.0045, or 0.45%

jeff jeffy answered 2 years ago
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