Given a quadratic utility function (u(x)=x-frac{b}{2} x^{2}), for (b>0), and a random variable (tilde{x}) with expected value
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Given a quadratic utility function \(u(x)=x-\frac{b}{2} x^{2}\), for \(b>0\), and a random variable \(\tilde{x}\) with expected value \(\mu\) and variance \(\sigma^{2}\), determine the risk premium \(ho_{u}(\tilde{x})\).
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Related Book For
Financial Markets Theory Equilibrium Efficiency And Information
ISBN: 9781447174042
2nd Edition
Authors: Emilio Barucci, Claudio Fontana
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