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Exercise 46 Assume your indifference utility function is U(E(r),o) = E(r) 0.5Ao?, where A is a risk-aversion coefficient. There is a risky asset whose expected
Exercise 46 Assume your indifference utility function is U(E(r),o) = E(r) 0.5Ao?, where A is a risk-aversion coefficient. There is a risky asset whose expected return is E(r) = 0.10 and standard deviation o = 0.15. What is the certainty equivalent rate of this risky asset to an investor with A = 2
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