Originally Posted by
Lovextreme
Spur currently have 2b alz that can invest on either seireitei bonds or seireitei stocks (gain ownership of the guild), Spur is a risk averse person with utility function U= ln W....... Spur has researched that if he invest all his money on seireitei stocks which the currently price is 250m each share, he will have 25% chance that the stock price will goes up to 750m per share. However if not, the price of the stock will drop to 100m per share. Spur also discovered that if he invest all his money into Seireitei bonds, he will have a return of 20% no matter what happens.
Question: Crate a best portfolio diversfication for Spur to invest on bonds and stocks in order to maxmize his utility
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