Guidelines for completing parts B and D on Problem Set 5

For parts B and D on Problem Set 5, you may solve these problems via either calculus or a spreadsheet model.

If you decide to implement a spreadsheet model, then you must email your spreadsheet model to “risk@garven.com” prior to the start of class on Tuesday. In the problem set that you turn in at the beginning of class on Thursday, please reference your spreadsheet when you explain your answers for parts B and D problem. However, if you rely upon the calculus for maximizing expected utility, then no spreadsheet is necessary, although you might consider validating the result that you obtain via calculus with a spreadsheet model anyway. Or, you could validate your spreadsheet model with the calculus.

In order to solve this problem via spreadsheet, you’ll need to use the so-called Solver Add-in. The instructions for loading the Solver add-in into Excel are provided at the following webpage:

https://support.office.com/en-us/article/load-the-solver-add-in-in-excel-612926fc-d53b-46b4-872c-e24772f078ca

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