Calculation Dissertation Example For Download

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Category: College
Subcategory: Investment
Level: College
Pages: 2
Words: 550
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You are lucky enough to have a million dollars in the bank. You have decided that there are only three serious investment options: putting it in your mattress, investing in stocks, and investing in bonds. Your utility function over total wealth is uux=x. There is no inflation. If you stick your money in the mattress (assume that it is perfectly safe), how much utility will you have at the end of the year? Response If I stick the money in the mattress and there is neither the risk of inflation nor the risk of losing money through theft or fire, the amount of wealth would remain the same as $1,000,000 notwithstanding the amount of time remains there. The value will have declined, as generally, money loses value with time. The utility function is calculated using the following formula: u(x) =√(x)Where, x is the value of the wealth. When the value is equated, then the formula yields the following amounts: (The value, we get the utility of one million dollars stuck under mattress after 1 ...

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