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(Solved): A Risk Agent, Whose Utility Is Given By U(w) = 150+w And Initial Wealth Is $10,000 Is Faced With A ...


A risk agent, whose utility is given by U(w) = 150+w and initial
wealth is $10,000 is faced with a potential loss of $3,500 with a probability

of p= 0.20.

Find Expected value(EV).

Find Expected Utility(EW).

What is the maximum premium they would be willing to pay to protect themselves against this loss?



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