1)A portfolio has an expected rate of return of 0

1)

The computation of the value of A is shown below:

U = Expected rate of return - (1/2) * A * Variance

where,

Expected rate of return = 0.14

Variance = 0.03

U = Risk free rate = 0.02

Now put these values to the above formula

So, the value of A is

0.02 = 0.14 - (1/2) * A * 0.03

0.02 = 0.14 - 0.015 * A

0.015 * A = 0.14 - 0.02

After solving this

A = 8

hence, the first option is correct

2)

A D & E are correct/True statements

A. Is True For the same rate of return risk averse investors prefer lower variance. Lower variance associated with low risk and low return

D. Is true because a risk averse investor prefer higher rate of return for the same standard deviation. Same standard deviation means same so they will go with investment with higher returns

E. Is true Risk Averse Investors do not accept or go for investment that are fair games. This is because fair games are investment with higher return along with higher or more risk. As risk averse investors do not go for high risk it is true.

Statement B and C are false because rest investors is not only carried with rate of return they also consider risk factor they are not ready to take high risk.risk premium is the additional return received or expected by an investor in return for the recognised risk of an investment above the risk free rate.Risk free rate is the market return on an asset that is considered to have no risk. If an investor is risk averse he will investments with risk premium over the risk-free rate. Risk averse investors accept only known risk and do not opt the unexpected risk. If a risk premium is offered over the risk-free rate they may opt for that investment.