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Use the Below Information to Answer the Following Question U = E(r)? (A/2)s2, Where a = 4

Question 3

Multiple Choice

Use the below information to answer the following question.  Investment  Expected Return E(r)  Standard Deviation 10.120.1320.150.1530.210.1640.240.21\begin{array}{llcc}\text { Investment } &\text { Expected Return } E(r) &\text { Standard Deviation }\\1&0.12&0.13\\2&0.15&0.15\\3&0.21&0.16\\4&0.24&0.21\\\end{array}
U = E(r) ? (A/2) s2, where A = 4.0.
Based on the utility function above, which investment would you select?


A) 1
B) 2
C) 3
D) 4
E) Cannot be determined from the information given.

Correct Answer:

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