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Diana would be equally happy with a riskless asset that pays a 7% return and a risky asset with a 10% expected return and a
Diana would be equally happy with a riskless asset that pays a 7% return and a risky asset with a 10% expected return and a 20% standard deviation. What is her coefficient of risk aversion?
Would Diana prefer an asset with an expected return of 15% and a standard deviation of 24%, or an asset with an expected return of 22% and a standard deviation of 31%?
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