A portfolio has an expected rate of return of 0.10 and a standard deviation s of 0.20. The risk-free rate is 0.05. Ron has the following utility function: U = E(r) - (A/2)s2. Which value of A makes this investor indifferent between the risky portfolio and the risk-free asset?

a. 6
b. 2.5
c. 4
d. 3.5

Jamie is saving for a trip to europe. she has an existing savings account that earns 3 percent annual interest and has a current balance of $4,200. jamie doesn’t want to use her current savings for vacation, so she decides to borrow the $1,600 she needs for travel expenses. she will repay the loan in exactly one year. the annual interest rate is 6 percent. a. if jamie were to withdraw the $1,600 from her savings account to finance the trip, how much interest would she forgo? .b. if jamie borrows the $1,600 how much will she pay in interest? c. how much does the trip cost her if she borrows rather than dip into her savings?