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Please see attached.

Base on the following info, and assume a concave utility function.

(ERA, ) = (10, 3), (ERB, ) = (10, 4), (ERC, ) = (11, 3) and (ERD, ) = (11, 4).

How can I establish a dominance relationship between the following securities based on
the expected return, standard deviation pairs (ER, )?

Are there any alternative method?

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Solution Summary

The expert analyzes the utility of concave functions. The dominance relationship between securities based on the expected return standard deviation pairs are determined.

Solution provided by:
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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