-The Above Figure Shows Bob's Utility Function

question 105

Multiple Choice

-The above figure shows Bob's utility function.He currently has $100 of wealth,but there is a 50% chance that it could all be stolen.The midpoint of the chord that runs from zero and intersects the utility function where wealth is 100,represents Bob's

• A) risk premium.
• B) expected utility of receiving $50 with certainty.
• C) expected utility of receiving $0 50% of the time and $100 50% of the time.
• D) risk neutrality.

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