A First Course in Probability (10th Edition)
10th Edition
ISBN: 9780134753119
Author: Sheldon Ross
Publisher: PEARSON
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Transcribed Image Text:Suppose my utility function for asset position x is given by u (x)
100
I now have $20,701 and am considering the following two lotteries:
L1: With probability 0.5 I gain $10000
With probability 0.5 I lose $10000
L2: With probability 0.85 I gain $3,317
With probability 0.15 I lose $8,029
What is the risk premium of L2? Round your answer to the nearest integer.
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