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An investor finds the following two investments as equivalent (i.e. the investor is indifferent between assets A and B): Asset A Asset B E[r] 3.7%
An investor finds the following two investments as equivalent (i.e. the investor is indifferent between assets A and B):
Asset A | Asset B | |
E[r] | 3.7% | 10.0% |
risk | 7% | 14% |
(where risk is provided as a standard deviation of the returns).
What is the coefficient of risk aversion of this investor?
compute Utility using decimal values rounding to the 4th decimal digit
Please explain the process in each step :)
thanks!!!
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