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What is the consumer risk premium

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Suppose uncertainty in financial markets and house prices causes a consumer's wealth to fluctuate around a mean value of $ 500,000 with a standard deviation of $ 50,000. What is the consumer's risk premium if his or her utility is logarithmic? How much would the consumer be willing to pay to avoid the fluctuations in wealth?

(Neglect prudence and temperance.)

Reference no: EM131203945

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