14. An investor is valuing different business opportunities by using the certainty equivalent formula c= E(X) - 302(X), and is offered to invest in two investments. The net payoff of Investment 1 has mean 150 and standard deviation 5, and the net payoff of Investment 2 has mean 50 and standard deviation 0. a. How large is the investor's coefficient of absolute risk aversion? (1 p) b. Which one of the two investments is preferred by the investor? (1 p) c. If the investor can choose to invest a fraction a in Investment 1 and a fraction 1-a in Investment 2, which fraction maximizes the utility of the investor? (3 p) 14. An investor is valuing different business opportunities by using the certainty equivalent formula c= E(X) - 302(X), and is offered to invest in two investments. The net payoff of Investment 1 has mean 150 and standard deviation 5, and the net payoff of Investment 2 has mean 50 and standard deviation 0. a. How large is the investor's coefficient of absolute risk aversion? (1 p) b. Which one of the two investments is preferred by the investor? (1 p) c. If the investor can choose to invest a fraction a in Investment 1 and a fraction 1-a in Investment 2, which fraction maximizes the utility of the investor? (3 p)