Roulan Has Wealth of $40,000 as Long as His Business

question 54

Multiple Choice

Roulan has wealth of $40,000 as long as his business does not burn down. However, there is a 50% probability that his business will burn down and cause a $30,000 loss, leaving her with $10,000 of wealth. Roulan's utility function is given by U = W^0.5, where W is wealth. What is the maximum price that Roulan would pay for full insurance that covers the potential $30,000 loss?

• A) 100.40.
• B) 145.23.
• C) 158.11.
• D) 161.51.

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Definitions:

Bail

The amount of money or conditions set by the court to ensure that an individual accused of a crime will appear for further criminal proceedings. If the accused person provides bail, whether in cash or by means of a bail bond, then the person is released from jail.

Police Log

A public record maintained by law enforcement agencies detailing daily activities, incidents, and responses.

Booking

The process of recording an individual's entry into the detention or jail system following an arrest.

Blotter

A blotter is an official record of events, transactions, or occurrences kept by an organization, often used in police departments to record crimes or incidents.