1 Suppose my utility function for asset position x is given by u(x)  ln x.

a Am I risk-averse, risk-neutral, or risk-seeking?

b I now have $20,000 and am considering the following two lotteries:

L1: With probability 1, I lose $1,000.

L2: With probability .9, I gain $0.

L2: With probability .1, I lose $10,000.

Determine which lottery I prefer and the risk premium of L2.