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You are an art collector with a wealth of $ 40,000. There is a painting that you would consider buying. The painting is for sale
You are an art collector with a wealth of $ 40,000. There is a painting that you would consider buying. The painting is for sale for $ 10,000. There is a 10% annual probability of total paint loss, and partial paint loss is not possible. What will be the maximum premium you would have to pay to insure the painting using the utility function U(x) = 1 - e-0.0001x?
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