Utility adjusted return, Different formula in asset allocation and Equity, which one is correct?

in Asset allocation we multiply risk aversion score and variance with 0.005

in equity we don’t multiply with 0.005.

is equity one incorrect? Equation 2 in reading 24


λA = the investor’s trade-off between active risk and active return; measures risk aversion = in active risk terms = 0.005* R(A) Both are correct.

got it… thanks!

You are welcome.