We are planning for the investment portfolio for a new customer of our consultancy firm. Analyzing...

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We are planning for the investment portfolio for a new customer of our consultancy firm. Analyzing the past investments of the customer, we observed that the utility function is of the type: X 2 U (X) = Tmax 1 min where Tmax 100 is the maximum considered revenue and "min = 0 is the minimum revenue. Question 1 (5 Points) What type of decision maker are we dealing with (risk averse, risk prone, risk neutral)? Question 2 (5 Points) What is the RP coefficient for this decision maker? Question 3 (10 Points) What is the maximum price at which we can sell the option in Figure 1 to our customer? (10 Points) 1/2 100 We are planning for the investment portfolio for a new customer of our consultancy firm. Analyzing the past investments of the customer, we observed that the utility function is of the type: X 2 U (X) = Tmax 1 min where Tmax 100 is the maximum considered revenue and "min = 0 is the minimum revenue. Question 1 (5 Points) What type of decision maker are we dealing with (risk averse, risk prone, risk neutral)? Question 2 (5 Points) What is the RP coefficient for this decision maker? Question 3 (10 Points) What is the maximum price at which we can sell the option in Figure 1 to our customer? (10 Points) 1/2 100