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For Someone Whose Utility Is Equal to Twice the Square

Question 32

Multiple Choice

For someone whose utility is equal to twice the square root of income, For someone whose utility is equal to twice the square root of income, where X denotes income,and the coefficient of relative risk aversion is ½. If this individual's income is currently $25,what insurance premium would (s) he pay to avoid a 20% chance of having income fall to $9? A) $1.79 B) $2.20 C) $3.20 D) $3.84 E) $4.02 where X denotes income,and the coefficient of relative risk aversion is ½. If this individual's income is currently $25,what insurance premium would (s) he pay to avoid a 20% chance of having income fall to $9?


A) $1.79
B) $2.20
C) $3.20
D) $3.84
E) $4.02

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