Question 26, 27 and 28.

esttOn3 24-28 Joan Summers has $100,000 to invest. She can buy a risk free asset that will pay 5% or she can invest in a stock that has a 0.4 chance of paying 15%, a 0.3 chance of paying 18%, and a 0.3 chance of providing a 6% return. Suppose that her marginal utility of portfolio risk is MUop return on portfolio is MUpRp Aand her marginal utility of 26. Determine the optimal level of return on portfolio for Joan. 27. Determine the optimal level of portfolio risk for Joan. 28. Determine the fraction of the wealth that she invests on stock (*) Sketch a diagram associated with Joan's investment decision. On the diagram show the optimal level of return on portfolio and portfolio risk which Joan chooses based on her preference and taste toward risk