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Mr. Bean's coefficient of risk aversion is 2. Mr. Bean wants to invest his entire...

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Finance

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Mr. Bean's coefficient of risk aversion is 2. Mr. Bean wants to invest his entire wealth of $200,000, and he is considering investing all the money in one of the following two portfolios. The expected return and standard deviation of returns for Portfolio 1 is 12% and 20%, respectively. The expected return and variance of returns for Portfolio 2 is 15% and 9%, respectively. The risk-free rate is 5%. Which of the following statements is true? neither Portfolio 1 nor Portfolio 2 is acceptable only Portfolio 1 is acceptable both portfolios are acceptable only Portfolio 2 is acceptable

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