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inerals Management Department Suppose that a person's utility function for total wealth is given as (6 marks) U(x) = 1.006 - 0.136e R Where x

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inerals Management Department Suppose that a person's utility function for total wealth is given as (6 marks) U(x) = 1.006 - 0.136e R Where x represents total wealth in dollars. if that person is considering the following, gambles Win $2,000 with probability OA Win $1,000 with probability 0.3 Win $0 with probability 0.2 Lose -$1,000 with probability 0.1 Calculate the EMV for the gamble above Calculate the Certainty equivalent (x) for the gamble above? (R = $572) Determine the risk premium? What do conclude about the risk attitude of the decision maker? Hint: Risk Premium= EMV-CE

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