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5. An individual has a vNM utility function over money of u(?) = v/7 , where x is the amount of money won in the

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5. An individual has a vNM utility function over money of u(?) = v/7 , where x is the amount of money won in the lottery. She faces two scenarios: Scenario 1: With a 50% probability she wins $36. With a 50% probability she wins $16. Scenario 2: With a 50% probability she wins $0. With a 50% probability she wins 5x. For what value of x will the risk premia be identical in these two scenarios? (a) 0 (b) 4 (c) 16 (d) For no values of x can the two risk premia be identical 6. A decision maker has a vNM utility function over money of u(x) = 2. This decision maker is (a) risk-averse. (b) risk-neutral. (c) risk-loving. (d) none of the above

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