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Rhianedd has a utility function of the form u(W)=W. She has initial wealth of 180. She also has a lottery ticket that will pay 60
Rhianedd has a utility function of the form u(W)=W. She has initial wealth of 180. She also has a lottery ticket that will pay 60 with probability 0.2 and zero otherwise. What is the certainty equivalent of the lottery for Rhianedd? QUESTION 29 Rhodri has a lottery ticket which will pay 90 with probability 0.1 and zero otherwise. He is willing to exchange the lottery ticket for a certain 5. What is the risk premium of the lottery ticket for Rhodri? QUESTION 30 Sioned has a utility function of the form u(W)=ln(W). What is her coefficient of absolute risk aversion if she has wealth of 13? QUESTION 31 Selwyn has a utility function of the form u(W)=1xW(1x), where x=0.4. Calculate Selwyn's coefficient of relative risk aversion when his wealth is equal to .54
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