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Which, if any, of the following statements is true? In each case, briey explain your answer. (a) Risk-loving people will accept all unfair gambles. [4

Which, if any, of the following statements is true? In each case, briey explain your answer. (a) Risk-loving people will accept all unfair gambles. [4 marks] (b) Constant absolute risk aversion implies decreasing relative risk aversion. [4 marks] (0) Higher risk aversion implies a higher risk premium for any given prospect. [4 marks]

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