Utility Function
A mathematical expression that assigns a value to all possible choices. In portfolio theory the utility function expresses the preferences of economic entities with respect to perceived risk and expected return.
Utility Function
The Theory of the Consumer, one of the two branches of microeconomics, is based on the notion that agents maximize utility.
The CES utility function applies to consumer theory the same functional form proposed by K.J.
Utility function
A utility function is a mathematical device that relates payoff amounts to the decision-maker’s utility for those amounts.
Utility-maximizers ...
A utility function other than CRRA can be used.
Transaction costs can be introduced. For proportional transaction costs the problem was solved by Davis and Norman in 1990.
A utility function to describe an individual's set of preferences clearly is not unique.
Denote a utility function by u(c). The Arrow-Pratt measure of absolute risk aversion is defined by:
RA=-u''(c)/u'(c)
This is a measure of the curvature of the utility function.
Utility function
A function that specifies the utility (well being) of a consumer for all combinations goods consumed (and sometimes other considerations). Represents both their welfare and their preferences.
Utility possibility frontier ...
Indifference curve The expression in a graph of a utility function, where the horizontal axis measures risk and the vertical axis measures expected return. The curve connects all portfolios with the same utility.
Optimal portfolio An efficient portfolio most preferred by an investor because its risk/reward characteristics approximate the investor's utility function. A portfolio that maximizes an investor's preferences with respect to return and risk.
The graphical expression of a utility function, where the horizontal axis measures risk and
the vertical axis measures expected return. The curve connects all portfolios with the same utilities according
to g and s .
J-curve ...
A mathematical expression that assigns a value to all possible choices. In portfolio theory the utility function expresses the preferences of economic entities with respect to perceived risk and expected return.
Personal Finance Headlines
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Stone also did some important early work in measuring consumer behavior. He was the first person to use consumer expenditures, incomes, and prices to estimate consumers' utility functions.
Thus a more risky stock will have a higher beta and will be discounted at a higher rate; less sensitive stocks will have lower betas and be discounted at a lower rate. Given the accepted concave utility function, ...
Economic Man is an imaginary figure who is able to satisfy economic models that push for consumer equilibrium. All of Economic Man's choices are based on the fulfillment of his or her "utility function", ...
 See also: Expected return, Efficient portfolio, Systematic risk, Unsystematic risk, Long position
  
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