You need to form a portfolio using one risky asset and one risk$-$free asset.

Assume that your degree of risk$-$aversion is $5.$ Your utility function is $U_p=E(r_P)-\frac{1}{2}A**{}_p^2$

What is the weight of the risky asset in the optimal portfolio which gives you the highest

utility?

$0$

$0\mathrm{.}475$

$1$

$0\mathrm{.}525$

$0\mathrm{.}5$