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Loss random variable: L Ceded Insurance: f(L) Insurance premium: (f(L)) = E(f(L)) Initial wealth: W-L final wealth: W-L+f(L)-(f(L)) Find the Maximize expected utility of final

Loss random variable: L

Ceded Insurance: f(L) Insurance premium: (f(L)) = E(f(L)) Initial wealth: W-L final wealth: W-L+f(L)-(f(L)) Find the Maximize expected utility of final wealth max E[U(W-L+f(L)-(f(L)))]

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