Let X be exponential, and u(x) = e x . Show that the certainty equivalent c(X)
Question:
Let X be exponential, and u(x) = −e−βx. Show that the certainty equivalent c(X) → 0 as β→∞. Interpret it in terms of risk aversion.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 50% (2 reviews)
From M182 it follows that cX 1 In E eBX nEex If X is exponential with parameter a t...View the full answer
Answered By
Muhammad Umair
I have done job as Embedded System Engineer for just four months but after it i have decided to open my own lab and to work on projects that i can launch my own product in market. I work on different softwares like Proteus, Mikroc to program Embedded Systems. My basic work is on Embedded Systems. I have skills in Autocad, Proteus, C++, C programming and i love to share these skills to other to enhance my knowledge too.
3.50+
1+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
The Equity Premium Puzzle: Investments in equities (like stocks) yield substantially higher returns than investment in bonds. By itself, this is no surprisebecause stocks are riskier than bonds. What...
-
Let X be exponential with expected value 3. Let Y be another random variable that depends on X as follows: if X > 5, then Y = X - 5; otherwise, Y = 0. a. Find the expected value of Y. b. Find the...
-
Find d (e*ee") ex+e (1+ e") ex+ e* (e* + 1) ee*+1(e *+(ee* + 1) O ex(ee" + 1)
-
A trader depreciates his vehicles at 40% per annum using the reducing balance method, with proportionate depreciation in the year of acquisition. In addition to vehicles acquired on 1 July 2010 for...
-
Error Analysis and Correcting Entry You have been engaged to review the financial statements of Longfellow Corporation. In the course of your examination you conclude that the bookkeeper hired during...
-
Two concentric spherical conducting shells of radii a = 0.400 m and b = 0.500 m are connected by a thin wire as shown in Figure Q25.15. If a total charge Q = 10.0 +C is placed on the system, how much...
-
With reference to Exercise 14.24, test for randomness with level 0.05 . Data From Exercise 14.24 14.24 The difference between the observed flux and the theo- retical value was observed at 20 points...
-
Perioto Inc. currently charges manufacturing overhead costs to products using machine hours. However, company management believes that the use of ABC would provide more realistic cost estimates and,...
-
A hedge fund with net asset value of $101 per share currently has a high water mark of $108. Suppose it is January 1, the standard deviation of the fund's annual returns is 35%, and the risk-free...
-
Let Michael be an EU maximizer with utility function u(x) = exp{x} and = 0.001. (For this value of , the values of expected utility in this problem will be in a natural scale.) Michael compares...
-
Let the utility function of a person be u(x) = e ax , a > 0. Graph it. Is the person a risk averter or a risk lover? Show that in this case, the results of the comparison of risky alternatives does...
-
Two angles whose sum is 180 are supplementary angles. Find the measures of the supplementary angles shown in each figure. (3x + 1) (7x +49)
-
Can a middleman be eliminated from a marketing channel? Explain.
-
What is logistics? Which major functions does it include?
-
Although you might think working for an ice cream company would be motivating under almost any circumstances, Graeters doesnt take its employees commitment for granted. Including full-time and...
-
When Targets CEO Brian Cornell announced the company would spend $7 billion for capital improvements and $1 billion more per year for operating costs to modernize operations for the digital age,...
-
After its initial public offering (IPO), DoorDash started trading publicly on the New York Stock Exchange (NYSE) in December 2020. An IPO occurs when a corporation sells stock to the general public...
-
Zorica and Pierre are married and file a joint return. Zorica earns $59,500, and Pierre earns $30,000. Their adjusted gross income is $97,000. Determine the maximum IRA contribution and deduction in...
-
A woman at a point A on the shore of a circular lake with radius 2 mi wants to arrive at the point C diametrically opposite on the other side of the lake in the shortest possible A time. She can walk...
-
Describe the problem faced by Plan International. What management , organization, and technology factors contributed to this problem?
-
Describe the system solution to this problem. Describe the types of systems used for the solution.
-
Why is human resources so important at Plan International?
-
The journal entry to record a business asset that was sold in QuickBooks 1. Land 1 million dollars 2. Building 200,000.00 3. Accumulated Depreciation 42,000 4. Selling Expenses 92,000 5. Gain on sale...
-
what can I say back to reply to my peer to add to the conversation? Fixed cost refers to the cost of using fixed inputs, which remains constant regardless of the quantity of output produced.(Reiter...
-
31-Dic Fee Earned Revenue 835,000.00 Income Summary 835,000.00 clsificar enLedger Assets Liabilities Equity Revenues Expenses 31-Dic Income Summary 693,000.00 Salaries Expense 620,000.00 Rent Expense...
Study smarter with the SolutionInn App