Assume Brandon's benefit function for water is 
and he consumes water both in droughts,WD and in the rainy season,WR.Assume his water bundle is WD = 400 and WR = 100 and the probability of drought is 0.75.Expected water consumption is
Definitions:
Yield to Call
The return an investor would receive if a callable bond is held until the issuer exercises their option to redeem it before its maturity date.
Current Yield
The annual interest payment of a bond divided by its current market price, used to compare the return on investment of different bonds.
Coupon Bond
A debt security that pays the holder a fixed interest rate (the coupon) periodically until maturity, at which point the principal is repaid.
Basis Point
A unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equal to 1/100th of 1%.
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