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4) You have estimated the following probabilities for earnings per share of companies A, B and C: Probability A B C 0.1 -10 -5 -10
4) You have estimated the following probabilities for earnings per share of companies A, B and C:
Probability | A | B | C |
0.1 | -10 | -5 | -10 |
0.2 | -5 | 0 | -5 |
0.4 | 5 | 0 | 10 |
0.2 | 5 | 5 | 10 |
0.1 | 10 | 5 | 15 |
- Assume that your marginal utility is positive, which company(ies) will you include eventually in your portfolio.
- If you are risk averse, which company(ies) will you include eventually in your portfolio.
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