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3. Consider the following table that contains the expected returns and standard deviations on four assets. Expected Return Standard Deviation Asset A 10% 15% Asset
3. Consider the following table that contains the expected returns and standard deviations on four assets. Expected Return Standard Deviation Asset A 10% 15% Asset B 7% 15% Asset C 12% 16% Asset D 10% 20% a) An investor has a utility U = E(r) 72A62. If they have a risk-aversion coefficient of 4, which asset do they prefer? b) What is the risk-free rate of return that will make the investor indifferent between the risk-free asset and Asset B
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