Determining the function of u

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Option 1: $3,000/month 40% of the time, and $5,000$5,000/month 60% of the time.

Option 2: $3,000/month 55% of the time, and $6,000$6,000/month 45% of the time.

Show your calculations (rounding all to 2 decimal places) to determine the following:

Part (a): Which of the two options is riskier?

Part (b): Given your utility function of U(I)=4.5 I^(2/5), which option will you choose?

Reference no: EM133077211

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