U = E(r) - (A/2)s², Where a = 4 -Based on the Utility Function Above,which Investment Would You Select

U = E(r) - (A/2) s², where A = 4.0. $\begin{array}{lll}\underline{\text { Investment }} & \underline{\text { Expected Return E(r) }} &\underline{ \text { Standard Deviation }} \\1 & 0.12 & 0.3 \\2 & 0.15 & 0.5 \\3 & 0.21 & 0.16 \\4 & 0.24 & 0.21\end{array}$

-Based on the utility function above,which investment would you select?

A) 1
B) 2
C) 3
D) 4
E) cannot tell from the information given

Correct Answer:

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