Categorising the utility functions

Reference no: EM1316385

Rachel utility function is given by U= I^1/2, where I represents annual income in thousands of dollars.

a. Is Rachel risk loving, risk neutral or risk averse?

b. Suppose Rachel is currently earning income of $23,000 (I =23) and can earn that income next year with certainty.

She is offered a chance to take a new job that offers a 0.5 probability of earning $25000 and a 0.5 probability of earning $16000. Should she take the new job?

Reference no: EM1316385

Questions Cloud

Highest to lowest returns and risk : Which of the following lists correctly ranks investments from highest to lowest returns and risk (thus, the highest risk security should be shown first, the lowest risk securities shown last)?

Find the derivative using logarithmic differentiation : Find the derivative using logarithmic differentiation

Their total cholesterol levels before also after the diet : Utilizing the 5% level of significance as there was a significant change in cholesterol level. Their total cholesterol levels before also after the diet.

Negative aspects of financial statement : Analyzing the positive and negative aspects of financial statement - Negative aspects of Kevin and Stacy's current financial status.

Categorising the utility functions : Rachel utility function is given by U= I 1/2 , where I represents annual income in thousands of dollars. Assume Rachel is currently earning income of $23,000 (I =23) and can earn that income next year with certainty.

What is the level of measurement for the variable : What is the level of measurement for the variable, "political ideology" measured as "Very Conservative", "Conservative","Moderate", "Liberal" and "Very Liberal".

Financial data using return on assets and return on equity : Computation of ratios for given financial data using Return on Assets and Return on Equity

Hypotheses test for mean of the population : Formulate the hypotheses to test to see if the mean of the population is at least 12 ounces.

Survey investigates either the proportion for employees : A state survey investigates either the proportion of 8percent for employees who commute by car to work is higher than it was five years ago.

User Account

All Pages