Question
In an economy there are only two assets, the market portfolio and the risk free rate with the following characteristics: E(r m )=10%, r f
In an economy there are only two assets, the market portfolio and the risk free rate with the following characteristics:
E(rm)=10%, rf= 6%
m = 18%
The expected utility function is given by: E(U) = E(r) 0.5 A 2 .
a) Find the optimal allocation for an individual with A=1.0
b) Find the optimal allocation for an individual with A=2.0
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Own Your Money
Authors: Michela Allocca
1st Edition
0760381127, 978-0760381120
