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4. Suppose that you consider the consumption preferences of an investor with initial endowment equal to 40,0005. The preferences of this investor are characterized by
4. Suppose that you consider the consumption preferences of an investor with initial endowment equal to 40,0005. The preferences of this investor are characterized by the following indifference curve: U the slope of which is equal to: dc /dco -Glc Moreover, the available investment opportunity set is expressed through the following equation:c (C) # 300 (40,000-co)' The risk free interest rate is equal to 10%. 4.1 Which is the optimal 4.2 What are the implications of your findings for modern portfolio theory and, specifically, how financing decision? [20%] your findings are related to the separation fund theorem in portfolio theory? [30%) Please explain your answer analytically. 4. Suppose that you consider the consumption preferences of an investor with initial endowment equal to 40,0005. The preferences of this investor are characterized by the following indifference curve: U the slope of which is equal to: dc /dco -Glc Moreover, the available investment opportunity set is expressed through the following equation:c (C) # 300 (40,000-co)' The risk free interest rate is equal to 10%. 4.1 Which is the optimal 4.2 What are the implications of your findings for modern portfolio theory and, specifically, how financing decision? [20%] your findings are related to the separation fund theorem in portfolio theory? [30%) Please explain your answer analytically
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