MATHEMATICS HIGH SCHOOL

Let u = w² ≥ 0 . (a) Compute the exact risk premium if initial wealth is 4 and if a decision maker faces the lottery (-2, 1/2 ; +2, 1/2 ). Explain why the risk premium is negative.

Answers

Answer 1
Answer:

Answer:

The risk premium is positive, indicating a preference for certainty over risk.

Step-by-step explanation:

The risk premium is a measure of how much someone is willing to pay to avoid a risky situation or to insure against potential losses. It is the difference between the expected value of a gamble (or lottery) and the guaranteed (certain) outcome.

In this case, you're dealing with a decision maker who has initial wealth of 4 and faces the following lottery:

   Option A: A loss of 2 with a probability of 1/2

   Option B: A gain of 2 with a probability of 1/2

Let's calculate the expected value of this lottery:

Expected Value (EV) = (Probability of Option A) * (Value of Option A) + (Probability of Option B) * (Value of Option B)

EV = (1/2) * (-2) + (1/2) * (2)

EV = -1 + 1

EV = 0

The expected value of this lottery is 0. This means that, on average, the decision maker doesn't expect to gain or lose wealth; it's a fair game in terms of expected value.

Now, to calculate the risk premium, we compare this lottery to a certain outcome. In this case, the certain outcome is keeping the initial wealth of 4.

Risk Premium = Guaranteed Outcome - Expected Value of Lottery

Risk Premium = 4 - 0

Risk Premium = 4

The risk premium is 4, which means that the decision maker is willing to pay up to 4 to avoid taking this lottery. This is because the lottery is a risky proposition, and the decision maker values the certainty of keeping their initial wealth at 4 over the gamble, even though, on average, the gamble doesn't result in a gain or loss. Therefore, the risk premium is positive, indicating a preference for certainty over risk.

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Answers

Answer:

The answer is 4:52

Step-by-step explanation:

Because each type of cards has four pairs
4the answe is 4: 52 because of the pairs you have and shown

The sum of two times a number and 5 more than the number is the same as the difference between -15 and twice the number. What is the number?

Answers

(2x)(x+5) = 2x-15

4x^2 + 5x = 2x-15

4x^2 = 7x -15

16x = 7x - 15

16x + 15 = 7x

2 2/7 + 2 1/7 = x

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Solve for x. 3(3x - 1) + 2(3 - x) = 0

Answers

The equation given in the question is
3(3x - 1) + 2(3 - x) = 0
9x - 3 + 6 - 3x = 0
6x + 3 = 0
6x = - 3
x = - (3/6)
   = - (1/2)
So the value of x as has been determined above is -1/2. I hope the procedure is clear enough for you to understand.You canalways use this method for solving problems that are similar in type withoutrequiring any help from outside.



A box is sitting on the floor. The box was then pulled with a force, Ft. The box did not move. The free-body diagram of the box is shown.A free body diagram with 4 force vectors. The first vector is pointing downward, labeled F Subscript g Baseline = negative 20 N. The second vector is pointing right, labeled F Subscript t Baseline = 10 N. The third vector is pointing upward, labeled F Subscript N Baseline = 20 N. The fourth vector is pointing left, labeled F Subscript f Baseline = negative 10 N. The up and down vectors are the same length. The right and left vectors are the same length.

Which describes the motion of the box based on the resulting free-body diagram?

It is moving up with a net force of 20 N.
It is moving to the right with a net force of 10 N.
It is in dynamic equilibrium with a net force of 0 N.
It is in static equilibrium with a net force of 0 N.
Mark this and return

Answers

Answer:

It is in static equilibrium with a net force of 0 N.

Step-by-step explanation:

EDGE21

I'm not sure if it is dynamic or static equilibrium but if I had to choose I'd say dynamic

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Answers

Answer:13111111/200000000

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Answers

Okay. Handle 500-100 first. That brings it to 3{5[10+5(400)+399]}. Next, Handle 5(400). That brings you to 3{5{10+2,000+399]}. Then handle all the addition. That leads to 3[5(2,409)]. Next, configure 5(2409). That leads to 3(12045). Then do that one which ends as 36,135 for a final answer.
Handle 500-100 first. That brings it to 3{5[10+5(400)+399]}. then Handle 5(400). That brings you to 3{5{10+2,000+399]}. next handle all the addition. That brings you to 3[5(2,409)]. Next, configure 5(2409). That gives you 3(12045). Then do that one which ends as 36,135 for a final answer.qx
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