u and d are two equally likely states

4. Now suppose the net returns of the three stocks are given by table 2. u Stock d 10% 20% B 20% 10% 15% 15% Table 2: The net returns of the stocks. (a) Let FA and rc be the net returns of stocks A and C respectively. Can you find a random variable such that a=Fc+ and E[7] = 0? (b) Can you find a risk-averse investor who prefers stock A (or B) to stock C? 4. Now suppose the net returns of the three stocks are given by table 2. u Stock d 10% 20% B 20% 10% 15% 15% Table 2: The net returns of the stocks. (a) Let FA and rc be the net returns of stocks A and C respectively. Can you find a random variable such that a=Fc+ and E[7] = 0? (b) Can you find a risk-averse investor who prefers stock A (or B) to stock C