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Derive an expression for the expectation of an Investor's next-period wealth if he invests a proportion a of his current wealth w in Equity A
Derive an expression for the expectation of an Investor's next-period wealth if he invests a proportion a of his current wealth w in Equity A (which pays -8% or +12%, with respective probabilities '4 and 34) and the rest in a noninterest-bearing bank account. [15 Marks]
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