Suppose Your Current Wealth (W) Is $8000 and You Obey

Multiple Choice

Suppose your current wealth (W) is $8000 and you obey the principles of expected utility theory. Suppose you are offered a gamble where you can win $5000 with one-half chance but you can lose $5000 with one half-chance. Suppose your utility function is defined as U(W) = W^0.5. (The square root of your wealth) . To you, the Certainty Equivalent (CE) of this gamble is (approx.) :

A) 7121.67.
B) 89.44.
C) 86.39.
D) 8,000.