Note that
Answer:
Mary's risk premium is $0.9375
Step-by-step explanation:
Mary's utility function,
Mary's initial wealth = $100
The gamble has a 50% probability of raising her wealth to $115 and a 50% probability of lowering it to $77
Expected wealth of Mary,
= (0.5 * $115) + (0.5 * $77)
= 57.5 + 38.5
= $96
The expected value of Mary's wealth is $96
Calculate the expected utility (EU) of Mary:-
The expected utility of Mary is $9.75
Mary will be willing to pay an amount P as risk premium to avoid taking the risk, where
U(EW - P) is equal to Mary's expected utility from the risky gamble.
U(EW - P) = EU
U(94 - P) = 9.63
Square root (94 - P) = 9.63
If Mary's risk premium is P, the expected utility will be given by the formula:
Mary's risk premium is $0.9375
The first one is the correct answer
Y-7=-3(x+2)
Answer:
g(x), f(x) and h(x)
Step-by-step explanation:
Given
Interval: (0,3)
See attachment for functions f(x), g(x) and h(x)
Required
Order from fastest to slowest decreasing average rate of change
The average rate of change is calculated as:
In this case:
i.e.
For f(x)
Calculate f(3) and f(0)
So:
For g(x)
From the table of g(x)
So:
For h(x)
From the graph of h(x)
So:
So, the calculated rates of change are:
By comparison:
From the fastest decreasing to slowest, the order is: <em>g(x), f(x) and h(x)</em>
hope this helps! ask if you have anymore questions
the answer is the third one on the page that is it my dude