If Ann’s utility function is U = W0.5, and she invests in a business w
If Ann’s utility function is U = W0.5, and she invests in a business which can yield $6,400 with probability 1/5, and $3600 with probability 4/5, then her risk premium to avoid bearing this risk is
A) $36.
B) $41.6.
C) $64.
D) $100.
ANSWER
A
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