Suppose a Person Has a Risk Averse Utility Function of U(W)=

question 6

Multiple Choice

Suppose a person has a risk averse utility function of U(W) = √(Wealth) .Also, suppose her initial wealth is $2,500.She can choose to play a game with a 50% chance of winning $1,100 and a 50% chance of losing $900.Would she choose to play the game ?

• A)yes
• B)no
• C)she will be indifferent between playing and not playing

---

Definitions:

Tarsals

A group of seven bones in the foot located between the lower leg bones and the metatarsals, contributing to the structure of the ankle.

Patella

The patella, a tiny, flat, triangle-shaped bone positioned at the forefront of the joint in the knee.

Fibula

A long, thin bone of the lower leg, situated lateral to the tibia, that stabilizes the ankle and supports lower leg muscles.

Carpals

The eight bones that make up the wrist, connecting the hand to the forearm.