Essay
Sam's utility of wealth function is U(w)= 15 
.Sam owns and operates a farm.He is concerned that a flood may wipe out his crops.If there is no flood,Sam's wealth is $360,000.The probability of a flood is 1/15.If a flood does occur,Sam's wealth will fall to $160,000.Calculate the risk premium Sam is willing to pay for flood insurance.
Correct Answer:
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Sam's expected utility is 
= 400 + 8,400...View Answer
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Correct Answer:
Verified
= 400 + 8,400...View Answer
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