Show that hyperbolic absolute risk aversion with 0, in the limit 1 specializes to Bernoullis logarithmic utility ...

We know that Bernoullis logarithmic utility is giv ...

Show that hyperbolic absolute risk aversion with = 0, in the limit 1 specializes

Question:

Show that hyperbolic absolute risk aversion with β = 0, in the limit γ → 1 specializes to Bernoulli’s logarithmic utility.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For answer-question

A First Course in Quantitative Finance

ISBN: 978-1108419574

1st edition

Authors: Thomas Mazzoni

See More Books

Question Posted: Feb 19, 2020 08:39 AM

See More Questions

Explain how a manager's risk aversion can affect decision making and how compensation plans should be designed to deal with risk aversion.
Given the exponential utility function U (W) = - e-aW: (a) Graph the function, assuming a < 0. (b) Does the function exhibit positive marginal utility and risk aversion? (c) Does the function have...
You've seen that the consumer's degree of risk aversion doesn't affect the quantity of actuarially fair insurance purchased (since all risk-averse consumers will fully insure). Using graphs, show...
Elm Corp. makes two products: C and D. The following data have been summarized: Indirect manufacturing cost information includes the following: The company plans to manufacture 250 units of each...
Which product would you expect if propene were used in place of ethene in eq. 4.11 (or eqs. 4.20 and 4.21): propylbenzene or isopropylbenzene? Explain. Eq. 4.11 CH2CH3 H2SO alkylation (4.11)
Shirley Tan, the manager of The View, a 58-seat bar at The Grand, a well-known 5-star hotel in Sydney, stared out the window at the great view of the Harbour and sighed. Her colleague, Sam Goh,...
In February 2007, The Elliot Group, Inc., an Illinois real estate developer, made a deal with the Village of Arlington Heights to develop property in that village. Arlington Market, LLC, was...
The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent...
An express train service travels from London to Paris are an average speed of 200km/h and returns to London at an average speed of 160km/h. Each day the train travels 4 trips from London to Paris and...
A survey of 100 firms found the following evidence regarding profitability and market share: Is there evidence that market share and profitability are associated? Profitability Market share <15%...
For the special class of utility functions u(w) = w ? be?aw, with a, b > 0, Bell (1988) suggested another measure of risk aversion. For this class, expected utility takes the form where the product...
Assume the random variable W has expectation value E[W] = and variance Var[W] = 2 . Mean variance analysis postulates that expected utility increases with increasing , and decreases with increasing...
According to quantum mechanics, the x x - and y y -coordinates of a particle confined to the region R = R = [ 0 , 1 ] [ 0 , 1 ] [ 0 , 1 ] [ 0 , 1 ] are random variables with joint probability...
Morola Limited is a medium-sized company established in 2020 dealing in commercial and residential heating equipment. The company currently employs about 90 staff with an annual revenue in excess of...
Multiply and simplify. y - 25 3y2 8y-3 . y2 +10y+ 25 y - 8y + 15 y = -5, 5, 3
H ow many seconds will it take a 2 5 hp motor to lift an 4 , 2 8 3 lb elevator at a distance of 1 5 ft ?
A particular type of purple light has a frequency of 7.32 10 14 s-1. Calculate the energy (J) of a single photon of this electromagnetic radiation. Enter your answer with no units.
Question 4 (30%) Vladimir had a taxable income of $85 000 in 2021. His revenues include a car allowance of 10 000$ for the 15 000km he made during that year. He is 67 years old and is starting to...
Using transactions listed in P4-1, indicate the effects of each transaction on the liquidity metric working capital and profitability metric gross profit percent. P4-1 The following selected...
1. Use these cost, revenue, and probability estimates along with the decision tree to identify the best decision strategy for Trendy's Pies. 2. Suppose that Trendy is concerned about her probability...
In 2018, Homer and his wife, Wilma (residents of a noncommunity property state) make the gifts listed below. Homer's previous taxable gifts consist of $100,000 made in 1975 and $1.4 million made in...
In 2018, Henry and his wife, Wendy, made the gifts shown below. All gifts are of present interests. What is Wendy's gift tax payable for 2018 if the couple elects gift splitting and Wendy's previous...
In June 2017, Karen transferred property with a $75,000 FMV and a $20,000 adjusted basis to Hal, her husband. Hal dies in March 2018; the property has appreciated to $85,000 in value by then. His...
Assume that an economy is based on two industrial sectors, agriculture (A) and energy (E). The technology matrix M is: A E A-> 0.6 0.1 =M E-> 0.1 0.7 How much input from A and E are required to...
Data Analytics Problem DAPS.1 Data Analytics Wheels and Skis Inc. is a seasonal business that sells bikes and skis. Offering products for both summer and winter outdoor activities allows sales to be...
P/R End Date Check Date 2/10/2023 2/14/2023 Company Name: Prevosti Farms and Sugarhous Number Number of Name Filing Status Dependents Dependents Hourly Rate or Under 17 Over 17 Period Wage of Regular...

Show that hyperbolic absolute risk aversion with = 0, in the limit 1 specializes

Question:

Step by Step Answer:

We know that Bernoullis logarithmic utility is giv...View the full answer

A First Course in Quantitative Finance

Students also viewed these Business questions