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1 Describe the quadratic utility function. 2 What are the strengths and weakness(es) of using the quadratic utility function in financial theory? 3 Can you

1 Describe the quadratic utility function.

2 What are the strengths and weakness(es) of using the quadratic utility function in financial theory?

3 Can you obtain (derive) the measure of absolute risk aversion for a quadratic utility function (with respect to wealth)?

4 Can you outline/explain how we could derive the capital asset pricing model (CAPM) using the quadratic utility function?

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