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You have a net worth of $996980 and a utility function given by u(w) = w 0.5 . If your house catches fire, a 2%
You have a net worth of $996980 and a utility function given by u(w) = w0.5. If your house catches fire, a 2% likelihood of occurring, you expect it to be total loss and it was recently assessed at $508636. What is the risk premium ($) you'd be willing to pay for full coverage against this fire risk?
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