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The ans is C show why Doc Hudson's car is worth $80,000 But Doc is careless and leaves the top down and the keys in
The ans is C show why
Doc Hudson's car is worth $80,000 But Doc is careless and leaves the top down and the keys in the ignition. Consequently his car will be stolen with probability 0.5. If it is stolen, he will never get it back. Doc has $80,000 in other wealth and his von-Neumann-Morgenstern utility function for wealth is u(w) = ln(w). Suppose that Doc can buy $K worth of insurance at a price of $0.6K. How much insurance will Doc buy? $0 Face Value (K) (Doc buys no insurance) $0 Face Value (K) lessthanorequalto $20,000 $20,000Step by Step Solution
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