4. Guy Laliberte, the owner of Cirque du Solie], is concerned about the health of his star trapeze artist. Ifthe artist is able to perform a triple somersault, Guy's revenues will he W2. However. if his star crashes and is unable to perform, revenues will fall to W1. Guy has determined that the prohability of a crash is p. Guy's Bernoulli utility of mmey function is v{W]=an. He has determined that the probability of an accident is p=. ll] {1%}, and that W|=l and W2=5. a. What is the expected value of Guy's revenues? b. Is Guy risk loving, risk neutral or risk averse? Why? What is his coefcient of absolute risk aversion? 01' relative risk aversion? How do they change with W? e. Determine Guy's expected utility. How much would he he willing to accept with certainty and be equally well off. What is this amount called? d. Lloyds of London is willing to o'er Guy insurance at a cost of q=t]. It] per dollar of coverage purchased. Determine how much insurance Guy will purchase in this case. Is he fully insured? How much better off is he relative to the case with no insurance that you calculated in part c]? e. Say the price of insurance increases to q=tl l 5 per dollar. How much insurance does Guy purchase now? Is he fullyr insured? Compare his level of utility to the no insurance case in part c] and the ease in part d}