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An investors financial wealth is $1 million. Human capital is risk-free and is also valued at $1 million. There is a risky asset with the
An investors financial wealth is $1 million. Human capital is risk-free and is also valued at $1 million. There is a risky asset with the mean of 10% and standard deviation of 15%. The risk-free return is 2%. The investors risk aversion parameter is equal to 3. What dollar amount will the investor contribute to the risky asset if the investor ignores the value of the human capital? Enter your answer in millions of dollars with two decimal places (for example, if the investor would contribute $750,000 then you should enter 0.75).
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