Suppose that you have utility in your wealth that is, Ask an Expert

Economics

Suppose that you have utility in your wealth that is accurately described by this function: U = W^1/2. Further, suppose that your wealth is $1,000,000.

What is the maximum amount you would pay to eliminate a risk that, with p = 0.001, your wealth would fall to $100,000?

What is the minimum amount an insurance company would charge to assume this risk?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91671168

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