Part II: Analytical Problems (28 pts.) 1. a. with variance according to the following formula: U = E(r) - 1/2 Ao where A=4. (3 pts.) CFA Preparation Problem #4: Investor "satisfaction" increases with expected return and decreases Portfolio Expected Return E(r) SD 1 2 0.30 0.50 3 0.16 4 0.21 sy to-bas bus toge breath 0.12 0.15 0.21 0.24 (2 pts.) Based on the formula for investor satisfaction or "utility", complete the table above for an investor with a risk-aversion parameter of A=4. Select the best portfolio for this investor. b. (1 pt.) What portfolio would you select if the investor were risk-neutral? mutsi boing gril Utility 50.75% Fsc

Part II: Analytical Problems ( 28 pts. ) 1. (3 pts.) CFA Preparation Problem \#4: Investor "satief.int:_.... . (2. pis.) Based on the formula for investor satisfaction or "utility", complete the table above for an investor with a risk-aversion parameter of A=4. Select the best portfolio for this investor. b. (1 pt.) What portfolio would you select if the investor were risk-neutral