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What much have been the average coefficient of risk aversion

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Reference no: EM132694143

Data over the last 100 years for the SP500 Index has the following statistics: Average Excess Return = 8%, Standard Deviation = 16%.

Problem 1. To the extent that these averages approximated investor expectations for the period, what much have been the average coefficient of risk aversion?

Problem 2. If the coefficient of risk aversion were actually, 3.25, what risk premium would have been consistent with the market's historical standard deviation

Reference no: EM132694143

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