2. Consider an investor that lives for t=0 and t=1. Holding the initial wealth level Wo, the investor maximizes his lifetime expected utility by finding optimal current consumption (Co)and portfolio weight(a) on the risky asset. max U(C) + E[BU(C)] s.t. C = (W. -Co) ((1+Z) + (1 - a)(1+rf) a (a) Assume that U is differentiable. Derive FOCs. (b) Let U be a CRRA utility function. Show that the optimizing a is independent of Co and W. Co. (c) Discuss how the optimizing a and Co are linked with the ARA. 2. Consider an investor that lives for t=0 and t=1. Holding the initial wealth level Wo, the investor maximizes his lifetime expected utility by finding optimal current consumption (Co)and portfolio weight(a) on the risky asset. max U(C) + E[BU(C)] s.t. C = (W. -Co) ((1+Z) + (1 - a)(1+rf) a (a) Assume that U is differentiable. Derive FOCs. (b) Let U be a CRRA utility function. Show that the optimizing a is independent of Co and W. Co. (c) Discuss how the optimizing a and Co are linked with the ARA