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Question 5 (10 Marks) Investments Plan B Expected Return, E(r) 0.16 0.19 0.25 0.28 Standard Deviation, 0.3 0.5 0.16 0.21 D Utility function U =
Question 5 (10 Marks) Investments Plan B Expected Return, E(r) 0.16 0.19 0.25 0.28 Standard Deviation, 0.3 0.5 0.16 0.21 D Utility function U = E(r) - 1/2Ag? a. Based on the above utility function, which investment plan would David choose if he was risk averse with A =4? Show all your calculations. 7 marks b. Based on the above utility function, which investment plan would David choose if he is risk neutral? Show all your calculations. 3 marks Show all your calculations
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