Determine the optimal for investor, Risk Management

The investor has constant wealth 1 and is offered to invest in shares of a project that either gains 3/2 or loses 1 with equal probabilities. Therefore, if the investor obtains shares of this project his wealth is 1+3 α/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 for this investor? (α Must be between 0 and 1).

Posted Date: 3/13/2013 5:43:07 AM | Location : United States







Related Discussions:- Determine the optimal for investor, Assignment Help, Ask Question on Determine the optimal for investor, Get Answer, Expert's Help, Determine the optimal for investor Discussions

Write discussion on Determine the optimal for investor
Your posts are moderated
Related Questions
Part A Glenda has taken a household insurance on her classic Queenslander home in North Queensland.  At the time of application, the insurer "URINSURED" asked numerous questio

Question 1: (a) Employers should conduct proper health risk assessment in order to identify and control health risks before they lead to losses. Describe the four stages invo

how to survie in this highly complicated world

The current stock price of IOU is $250 and has a standard deviation of 35% per year. The risk-free interest rate is 5% per year compounded continuously. Find the prices of a call a

Question: (i). Describe the term ‘ecosystem' (ii). What are the major ecosystems in the tropical marine environment. (iii). State and describe four main ecological/eco

State about the Management Risk Management, all said and done, is made of people who are mortal, fallible and capable of making a mistake or a poor decision. Errors made by

The investment philosophy of Claire can be reflected from her comments “I will be satisfied if I just don’t lose money in my portfolio. I am more afraid of losing money than I am

explain the risk involves in swap business

Risk is inherent in business and hence there is no escape from the risk for a businessman. However, he may face this problem with greater confidence if he adopts a scientific appro

You are the project manager for XYZ Company. Within six months of work, you have identified risks exposure on the company project and specific risk process has been instantiated. W