Problem 1. Comment on what Table 6.4 (page 182) is explaining to the reader and in addition, how equation 6.7 relates to Figure 6.6. What is the intuition behind equation 6.7? Derive the optimal portfolio equation

Table 6.4 E(rd) 070 078 086 094 102 110 118 .126 134 142 150 Utility levels for various positions in risky assets (y) for an investor withh risk aversion A 4 0 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 0 022 044 066 088 110 132 .154 176 198 220 0700 0770 0821 0853 0865 0858 0832 0786 0720 0636 0532 Table 6.4 E(rd) 070 078 086 094 102 110 118 .126 134 142 150 Utility levels for various positions in risky assets (y) for an investor withh risk aversion A 4 0 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 0 022 044 066 088 110 132 .154 176 198 220 0700 0770 0821 0853 0865 0858 0832 0786 0720 0636 0532