3) Suppose the value function v(.) of an investment fund manager is defined by: v(x) = x for gains and v(x) = -2xl for l

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3 Suppose The Value Function V Of An Investment Fund Manager Is Defined By V X X For Gains And V X 2xl For L 1 (32.06 KiB) Viewed 18 times

3) Suppose the value function v(.) of an investment fund manager is defined by: v(x) = x for gains and v(x) = -2xl for losses. Yesterday, the fund manager had a good day: their investments earned $15m. Today, the fund manager had a bad day: their investments lost $ 10m. a) What is the fund manager's value if they integrate the investment returns for the two days? (0.5 marks) b) What is the fund manager's value if they evaluate the investment returns for the two days separately? (0.5 marks) c) Discuss how an investor's information evaluation horizon (i.e., frequent vs infrequent) might affect their investment strategy. (1 mark)