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

Question 1: Explain role of the project manager throughout a project life cycle with reference to the following. (a) Setting up a project team (and the factors he has to con

Beta- measure of systematic risk for an investor who holds the shares of one company, it is total variance that is more relevant. But for most usual active investor who wishes to d

Determine a process to managing risk 1.  Risk committee set up to address risk issues identified for example regular risk audits, to identify and estimate likelihood and conseq

Devise a disaster recovery plan • Business Impact Analysis • Treatment Strategies: o Risk Avoidance o Risk Reduction o Risk Transfer o Risk Retention • Ingredients of a disaster re

Q. Show Quick and regular returns of the investments? Quick and regular returns of the investments: every investor wants a quick and regular returns on his investment sufficienc

Ben owns a home in "tornado alley" in Oklahoma that is worth $100,000.  In any given year, he knows that there is a 1% chance his home will be hit by a tornado.  If it is, his home

Explain how you would hedge a short position in a European (plain vanilla) call with six  weeks to maturity if the spot price is 60, the strike is 65 and σ = 0.3, r=0.1. You rehedg

The marketing department of a vitamin water company wishes to determine the maximum expected payoff from introducing a new strawberry drink. What decision, in terms of choosing the

evaluate the importance of leverage in financial management of a small company