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only answer question 2 FIN321 Midterm Exam Sample The following information relates to the first 5 questions. An investor has the following utility of wealth
only answer question 2 FIN321 Midterm Exam Sample The following information relates to the first 5 questions. An investor has the following utility of wealth function. U = 2 In(W) Her current wealth level is $680,000. Suddenly, an unavoidable risk appears and she is left with the following risky distribution of possible outcomes. probability wealth 4 $300,000 .3 .2 $600,000 $800,000 $900,000 1 1. What was this investor's original utility of wealth? 2. What is the investor's expected wealth given the risky distribution of possible outcomes? 3. What is the investor's expected utility of wealth given the risky distribution of possible outcomes? 4. What is the investor's certainty equivalent wealth
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