How much should the company invest in risky assets

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A company has initial wealth W and would like to invest this to get maximum returns. It can get higher returns (rr ) if it invests in risky assets, but the return is not guaranteed. A return (rs ) is guaranteed if it invests in safe assets. How much should the company invest in risky assets (R), to maximize its wealth at the end of a stipulated period? Formulate the objective function for the optimization problem.

Reference no: EM131238582

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