1. Suppose that a group of people AZ share an income risk 1, in proportion to their risk tolerances. For example, individual A bean a share Prip. Pe where PA = P. and so on. Show that A's risk premium in this care in ko Ver TPA + ... pala and hence that the total nisk premium borne by all the members is Var! + ... + P2-the same as the risk peenium that would be tequired by a single person whose risk tolerance is p +.. P 1. Suppose that a group of people A, ... Z share an income risk I, in proportion to their risk tolerances. For example, individual A bears a share palles + Pz) where Pa = Ilta, and so on. Show that A's risk premium in this case is PAVarI/A + .. Pz) and hence that the total risk premium borne by all the members is Vardyp. + ... + Pz/ the same as the risk premium that would be required by a single person whose risk tolerance is PA + ... Pz