An investor has utility function $U(x)=x^{1 / 4}$ for salary. He has a new job offer which

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An investor has utility function $U(x)=x^{1 / 4}$ for salary. He has a new job offer which pays $\$ 80,000$ with a bonus. The bonus will be $\$ 0, \$ 10,000, \$ 20,000$, $\$ 30,000, \$ 40,000, \$ 50,000$, or $\$ 60,000$, each with equal probability. What is the certainty equivalent of this job offer?

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Investment Science

ISBN: 9780199740086

2nd Edition

Authors: David G. Luenberger

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