Suppose investor satisfaction" with a portfolio increases with expected return and decreases with variance according to the following utility" formula: U = E(r) 1 2 A 2 (r)

Investment	Expected Return	Standard Deviation
1	0.12	0.30
2	0.15	0.50
3	0.21	0.16
4	0.24	0.21

(a) Based on the formula for investor satisfaction or utility," which investment would you select if you were risk averse with A = 4?

(b) Which investment would you select if you were risk neutral, with A = 0?