Question
Consider an economy consisting of two stocks (X and Y) and a risk-free asset. Investor A maximizes his utility function by investing 10% of his
Consider an economy consisting of two stocks (X and Y) and a risk-free asset. Investor A maximizes his utility function by investing 10% of his wealth in the risk-free asset, 75% in X, and 15% in Y. Investor B maximizes his utility function by investing 40% of his wealth in the risk-free asset. What fraction of his wealth does investor B invest in X?
| A. | 15% | |
| B. | 60% | |
| C. | 37.5% | |
| D. | 50% |
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International Financial Management
Authors: Jeff Madura
11th Edition
0538482966, 9780538482967
