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Business, 22.02.2021 19:30 mediocresquash

Jack and Diane, grew up in the heartland, have now been married for 20 years and would like to invest some money. Assume the risk free rate is 2 % annually. They take a test that rates their individual risk preference. Jack is given a 5 and Diane a 2. Expected return Standard Deviation
6% 10%
8% 20%
12% 25%

Required:
a. Which investment can the couple agree on , that it is better than the risk free asset?
b. What is the optimal y (risky) for Jack?

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Answers: 3

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