Assume the following utility function for investors.

U = 2*r (1/)*r*

Where r is rate of return, is standard deviation of returns and is degree of risk-aversion coefficient.

a) Assume further that Jakovs degree of risk-aversion coefficient is 20. Which one of the following portfolios would Jakov prefer?

Portfolio	return	Standard deviation
D	14	8
G	16	12

b) Assume instead Jakov desires an investment whose rate of return does not fall below 1% with probability of no more than 5%. Which portfolio would he prefer in this case assuming returns are normally distributed?