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A risk averse man has a utility function U= (W is wealth). This man owns a $90,000 worth of asset. But he worries about losing
A risk averse man has a utility function U= (W is wealth). This man owns a $90,000 worth of asset. But he worries about losing $50,000 out of his asset value due to any unexpected accident. One insurance company offers him an insurance which covers all his losses in case of accident with the premium of $27,500. What is the approximate probability of accident to justify accepting this insurance offer
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