Utility index , Applied Statistics

Assignment Help:

If the economy does well, the investor's wealth is 2 and if the economy does poorly the investor's wealth is 1. Both outcomes are equally likely. The investor is offered to invest in shares of a project that gains 3=2 if the economy does well and loses 1 if the economy does poorly. Therefore, if the investor obtains α shares of this project his wealth is 2 + 3α/2

with probability 1/2 and 1= α with probability 1/2. The investor is an expected utility maximizer with utility index u(z) = ln z. What is the optimal α for this investor? ( α must be between 0 and 1).


Related Discussions:- Utility index

Probability, .1 Modern hotels and certain establishments make use of an ele...

.1 Modern hotels and certain establishments make use of an electronic door lock system. To open a door an electronic card is inserted into a slot. A green light indicates that the

Arithmetic mean, Arithmetic Mean   The process of computing Arithmetic M...

Arithmetic Mean   The process of computing Arithmetic Mean in the case of individual observations is to take the sum of the values of the variable and then divide by the number

#title., 1 Se toma una muestra de 81 observaciones con una desviación están...

1 Se toma una muestra de 81 observaciones con una desviación estándar de 5. La media de la muestra es de 40. Determine el intervalo de de confianza de 99% para la media

Number of principal components, While there are p original variables the n...

While there are p original variables the number of principal components is m such that m

Time series, Year Production 2006 8 2007 6 2008 10 2009 12 2010 11 2011 15 ...

Year Production 2006 8 2007 6 2008 10 2009 12 2010 11 2011 15 2012 14 2013 16 Determine the trend from data given above?

Eco203, Waht is the product of £ x

Waht is the product of £ x

..National Account- Descriptive Statistics, A country''s national accounts ...

A country''s national accounts are assumed to look as follows: GDP 1180 VAT and taxes 140 Commodity subsidies 60 Raw material and consumables 530 1. Calculate GVA 2. Calculate t

Three types of food question?, #There were three types of food, and the res...

#There were three types of food, and the researcher recorded which foods were bought. Peanut Butter Banana Hamburger 15

Its a portfolio assignment, i m doing MBA in singapore and i want a good wo...

i m doing MBA in singapore and i want a good work. i want a data for 200 observations and then answers for some questions. and i need the data to be approved by our professor first

Keno, Having 11 numbered balls -0 to 10 -into a basket and have 6 spaces t...

Having 11 numbered balls -0 to 10 -into a basket and have 6 spaces to be numbered with the balls selected in each 6 chances and it returned it back to the basket each time. Chanc

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd