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= 1. Let U(x) = 1 -e-27 be a utility function. Consider an investment whose payoff is uniformly distributed over (-1,1). Evaluate the investment using
= 1. Let U(x) = 1 -e-27 be a utility function. Consider an investment whose payoff is uniformly distributed over (-1,1). Evaluate the investment using the Expected Utility criterion, and find the certainty equivalent and the risk premium. What does the sign of the risk premium tell you about the utility function U? = 1. Let U(x) = 1 -e-27 be a utility function. Consider an investment whose payoff is uniformly distributed over (-1,1). Evaluate the investment using the Expected Utility criterion, and find the certainty equivalent and the risk premium. What does the sign of the risk premium tell you about the utility function U
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