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Suppose we have an investor with a utility function U(c) = c and wealth of $100,000. Suppose that they will have X(H) = $40,000 with

Suppose we have an investor with a utility function U(c) = c and wealth of $100,000. Suppose that they will have X(H) = $40,000 with probability p = 3 4 or X(T) = $160,000 with probability 1 p = 1 4 . If this person is offered insurance for $13,000 which will eliminate their risk, would they choose to purchase the insurance?

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