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Bruce's utility function is U(w)=ln(w). His wealth consists of $360,000 in a bank account and a house worth $90,000. There is a 7% chance that
Bruce's utility function is U(w)=ln(w). His wealth consists of $360,000 in a bank account and a house worth $90,000. There is a 7% chance that his house will be destroyed by a flood. Compute Bruce's risk premium associated with this risk. ** Make sure to round to AT LEAST 6 decimal places in your intermediate calculations. Exponentials are highly sensitive to rounding! Bruce's utility function is U(w)=ln(w). His wealth consists of $360,000 in a bank account and a house worth $90,000. There is a 7% chance that his house will be destroyed by a flood. Compute Bruce's risk premium associated with this risk. ** Make sure to round to AT LEAST 6 decimal places in your intermediate calculations. Exponentials are highly sensitive to rounding
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