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Consider three investors A, B, and C. Investor A's risk aversion coef?cient AA = 5, B's risk aversion coef?cient AB = 4.2, and C's risk aversion coef?cient A0 = 3. There is one risky asset, whose expected return is 10 percent and standard deviation is 12 percent. Suppose the risk-free borrowing rate is 4 percent and the risk-free saving rate is 3 percent. The objective of the three investors is to maximize E033) - 0.005A103, where E(rc) and 03 are the expected return and the variance of an investor's portfolio and 2' = A, B, C.
(a) What is investor A's optimal portfolio weight in the risky asset?
(b) What is investor B's optimal portfolio weight in the risky asset?
(c) What is investor C's optimal portfolio weight in the risky asset?
Any economically efficient production process is always technically efficient. Any technically efficient production process is always economically efficient. A production process must always be both economically efficient and technically efficient.
a) For a firm, how does the concept of producer surplus differ from that of profit if it has no fixed costs?
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