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Mean-variance utility preferences

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Reference no: EM132473950

Assume investors have mean-variance utility preferences

U=E(R)-0.5Aσ^2

a. What does represent?

I. Investors required return

II. Investors risk aversion

III. Investors demanded compensation for risk

IV. It is a quantity positively correlated with the certainty equivalent

V. Preferences for one unit of return per 0.5 units of risk

Circle all the correct answers. There could be more than one.

Reference no: EM132473950

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