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8. If alpha equals 10%, what is the preferred investment shown in problem 1 using Kataoka's safety-first criterion? Problem 1: Investment A Investment B Investment
8. If alpha equals 10%, what is the preferred investment shown in problem 1 using Kataoka's safety-first criterion?
Problem 1:
Investment A Investment B Investment C S Outcome Probability Outcome Probability Outcome Probability 1/3 1/3 1/3 1/4 1/2 14 4 9 18 1/5 3/5 1/5 10 Investment A Investment B Investment C S Outcome Probability Outcome Probability Outcome Probability 1/3 1/3 1/3 1/4 1/2 14 4 9 18 1/5 3/5 1/5 10
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