PLEASE SOLVE 2(b) part only

3} Consider the following two period utility function: 1? 1? Cl + 2 1 if\" 1 1' Where Ci is the consumption date i (i=1+2]. Why is the parameter y sailed a measure of risk aversion? Show that the inverse of y is the elasticity of intertemp-oral substitution in oonsumplion. Carefully interpret your results. {50 marks} b} Using a standard open economy model of asset pricing based on consumption CAFth derive an expression for the equity premium and explain my the observed high equity premium oennot be explained by such a model. {50 marks}