Q21. What is the certainty equivalent return for an investor…
Q21. What is the certainty equivalent return for an investor with with lambda = 4 of a portfolio equally weighted in stocks and bonds, given the annual log returns in the table? Assume that expected utility is represented by: E ( U ) = μ − λ σ 2 {“version”:”1.1″,”math”:”E(U) =\mu – \lambda\sigma^2″} Log Returns Year Stocks Bonds 1 8% 2% 2 -5% 3% 3 10% -1% 4 12% 1% 5 6% 4%
Read DetailsQ20. What is the expected utility for an investor with lambd…
Q20. What is the expected utility for an investor with lambda = 4 of a portfolio equally weighted in stocks and bonds, given the annual log returns in the table? Assume that expected utility is represented by: E ( U ) = μ − λ σ 2 {“version”:”1.1″,”math”:”E(U) = \mu – \lambda\sigma^2″} Log Returns Year Stocks Bonds 1 8% 2% 2 -5% 3% 3 10% -1% 4 12% 1% 5 6% 4%
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