Problem 1 Derive individual demand for the risky asset at t 0, D, , by writing out the first order condition (for an interior solution to) the maximization problem. Does the solution depend on the initial level of wealth? Why? Hint: (i) Maximizing EL X ] is equivalent to maximizing - In (- ELX ]. (ji) When X is lognormally distributed (i.e., In(X ) is normally distributed, In(X )~ NX, 02 ), we