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f a risky asset has a standard deviation of 12%, the risk free rate is 4%, and your degree of risk aversion (A) is 3,
f a risky asset has a standard deviation of 12%, the risk free rate is 4%, and your degree of risk aversion (A) is 3, what should be the assets expected rate of return in order for you to consider it over the risk free asset? [Hint: Use the certainty equivalent equation]
4.0% | ||
6.16% | ||
4.18% | ||
4.4% |
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