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Describe the Shape of the Utility Function of a Risk

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Short Answer

Describe the shape of the utility function of a risk averse person.


Definitions:

Transferability

Transferability is the ability of an asset to be transferred or moved from one party to another with ease.

Pre-tax Profit

Earnings of a business before any tax is applied; also known as gross profit or operating profit.

C Corporation

A legal structure for a corporation in which the owners are taxed separately from the entity, subject to corporate income tax.

Tax Rate

A percentage at which an individual or corporation is taxed.

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