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please solve for each part An investor has $90,000 to invest. She is considering two different stocks. Her advisor tells her there is a 40%

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please solve for each part

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An investor has $90,000 to invest. She is considering two different stocks. Her advisor tells her there is a 40% probability that the market will rise and a 60% probability the market will fall. The advisor provides the following table of possible wealth outcomes if she invests the whole $90,000 in only one or the other of the two stocks. Stock Wealth if market rises Wealth if market falls Pfizer $100,000 $30,000 Haliburton $120,000 $80,000 The investor's utility function is given by U (W ) =Wi (a) Given the probability of a rising and falling market, compute the expected value of the investment in Pfizer and Haliburton stocks respectively. (2) (b) Using the data provided on the Haliburton stock returns, compute the expected utility of an investment in Haliburton and show that this investor is risk averse. (4) (c) On the basis of expected utility, which stock will this investor prefer to invest in? (3) (d) Another investment strategy is to diversify. This involves investing half the portfolio in Pfizer stock and the other half in Haliburton stock. With this strategy, what would the investor's wealth be if the market rises and if the market falls? (2) (e) What is the expected utility of the diversified portfolio investment from part (d)? (2) (f) On the basis of expected utility, which stock will this investor prefer to invest in, Haliburton, Pfizer or the diversified portfolio from part (e)? (2)

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