Assume that you have a logarithmic utility function for wealth U (W) = ln(W) and that you

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Assume that you have a logarithmic utility function for wealth U (W) = ln(W) and that you are faced with a 50/50 chance of winning or losing $1,000. How much will you pay to avoid risk if your current level of wealth is $10,000? How much would you pay if your level of wealth were $1,000,000?
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Financial Theory and Corporate Policy

ISBN: 978-0321127211

4th edition

Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri

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