Assets

Consider these four assets, each specified in terms of possible yields with their corresponding probabilities: A : [30, 1] B : [48, 3; 0, 4] C : [30, }; 0, }] D : [48, ; 0, ] (a) Rounding where necessary to two decimal places, for each asset evaluate the mean yield and the standard deviation (denoting them HA, CA, etc). (b) An investor has preferences represented by v(u, o) = 3u - o. What is this investor's preference ordering of the four assets? (c) Show that the preferences obtained in (b) are not representable in terms of expected utility, with utility defined over yields. (d) | Does C stochastically-dominate D? Does D stochastically-dominate C? Explain