Models in finance

Task 1: There are well-known models in finance which assume that the decision maker is an expected utility maximiser with a CARA utility function. Propose structural econometric models which can be used to test this assumption, and use your allocated data file to estimate at least two of the proposed models. Report the estimation results in a format that is suitable for academic journals, and discuss your findings.

Task 2: Critically evaluate the construction and use of variable TK in Barberis, Mukherjee and Wang [2016].