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
The sustainability of coastal tourism destinations depends partly on their ability to adapt planning and management practices to the impacts of climate change and also to increase

The general principles  of risk management are: A) Management  to  follow a structured approach B) Protection of human health as the primary consideration in risk management

Q. What is Expected Return on a Portfolio? The Expected Return on a Portfolio is simply' the weighted average of the expected returns of the individual securities in the given

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

identify risks faced by a banking institution and ways of preventing them

The risks in the transaction seem to be very broad and encompassing. Can Engineering Tech effectively protect its interests and assure payment?

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

Black Rock Investors is managing the pension fund of Virgin Atlantic. Sir Richard Branson wants to assess the risk of the portfolio following the Euro crisis. During a discussion

What is Industry Risk An industry may be viewed as group of companies which compete with each other to market a homogeneous product. Industry risk is that portion of an  inv

Which of the following statements about group insurance underwriting principles is (are) true? I. If a plan is contributory, 100 percent of the eligible employees must be covered.