Suppose that there is a safe asset, a single risky asset and two states of the world. Use a diagram to investigate the effects on the investor’s demand for the risky asset of increases in (a) wealth;...

Suppose that there is a safe asset, a single risky asset and two states of the world. Use a diagram to investigate the effects on the investor’s demand for the risky asset of increases in (a) wealth; (b) the expected return on the risky asset; (c) the return on the safe asset; (d) the probability of the high rate of return state; (e) a mean preserving spread in the rate of return on the risky asset.