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Given the following Utility function: U=E(r)1/2A2 a. Draw the indifference curve in the expected return-standard deviation plane corresponding to a utility level of 0.12 for
Given the following Utility function: U=E(r)1/2A2 a. Draw the indifference curve in the expected return-standard deviation plane corresponding to a utility level of 0.12 for an investor with a risk aversion coefficient A=4. 8 marks Suggestion: Choose several possible standard deviations ranging from 0 to 0.25, and find the expected rates of return E(r) providing a utility level of 0.12. Then plot the expected return-standard deviation points so obtained. b. Draw the indifference curve corresponding to a utility level of 0.12 for an investor with risk aversion coefficient A=2.5. 8 marks c. Compare the indifference curve of a more risk-averse investor in 1 (b) with the indifference curve in 1(a)? Briefly explain
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