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Business, 15.04.2020 18:41 bgallman153p71edg

A. Draw the indifference curve in the expected return-standard deviation plane corresponding to a utility level of 0.05 for an investor with a risk aversion coefficient of 3. (Hint: use the following standard deviations: 0, 0.05, 0.1, 0.15,0.2, 0.25. For each one, find the expected rates of return providing a utility level of 0.05).

b. Draw the indifference curve corresponding to a utility level of 0.05 for an investor with risk aversion coefficient A = 4. Comparing your answer to a, what do you conclude?

c. Draw an indifference curve for a risk-neutral investor providing utility level 0.05.

d. Draw the indifference curve for a utility level of 0.05 for a risk lover.

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