# Assume an investor has utility for money given by some utility function u(W), where u'(W) gt; 0, uquot;(W) lt; 0. Let R(W) denote the associated…

Assume an investor has utility for money given by some utility function u(W), where u'(W) > 0, u”(W) < 0.

Let R(W) denote the associated index of absolute risk aversion,

R(W) = -(u”(W)/u'(W))

i). Computer R(W) for the following three examples, (y = gamma)

1. u(W) = W – 1/2W^2
2. u(W) = -e^(y*W), y > 0
3. u(W) = 1/7W^y, y > 0

ii) Now assume u(W) has the property that R(W) is constant(e.g the middle example above). If the investment opportunities consist of a single safe asset with return rF and a single risky asset with random return r^(r-hat), show that the investor with utility u(W) will always choose to invest the same amount of his/her wealth in the risky asset no matter what his/her income W is.

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.