CFA L3 Utility Function

5/18/2024 5:14:40 PM
There's some confusion regarding what variation of the formula we should know given exam day preparation.

This morning in a live class we went over an example where the utility function U=E(r)-.5(A)(Sigma^2)

HOWEVER

The study guide notes this equation as being U=E(r)-.005(A)(Sigma^2)

The equation we used this morning was with .5 but the stated equation is .005. Which one are we to use?

Thanks


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