A risk averse investor with utility function 
where X denotes wealth is indifferent between purchasing a stock or a bond for $100. The bond yields a safe return of 5%. The stock has a 50% chance of yielding a -19% rate of return (a capital loss of 19% and no dividend) . The risk premium on the stock is then
Definitions:
Sterilized
Made free from all living microorganisms, often through the use of heat, chemicals, or radiation, to prevent infection or contamination.
Well-Organized
Exhibiting a high degree of systematization and efficiency in arrangement or function.
Comfortable Temperature
An ambient temperature range in which most people feel physically comfortable, typically between 68 to 72 degrees Fahrenheit (20 to 22 degrees Celsius).
Wheelchair
A chair fitted with wheels, designed to be a mobility aid for people who are unable to walk or have difficulty walking.
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