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A mathematical expression that assigns a value to all possible choices. In portfolio theory, the utility function expresses the preferences of economic entities with respect to perceived risk and expected return.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
The expression of desire in mathematical terms. Utility function is important in investing; it may show the usefulness of investing in some securities as opposed to different ones. For instance, a stock with low risk and a high return has a higher utility function than a stock with high risk and a low return. See also: Marginal Utility.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
utility functiona function denoting the quantities of goods and services that an individual consumes, of the form:
where Ut = total utility and x1 ,x2 . products consumed.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005