Question: 12.a) Assume that you have a logarithmic utility function for wealth U/W)- In(W) and that you are faced with a 60/40 chance of wining and

12.a) Assume that you have a logarithmic utility function for wealth U/W)- In(W) and that you are faced with a 60/40 chance of wining and losing Rs.1000 0 How much will you pay to avoid this risk if your current level of wealth is ed by CamScanner 8 Marks) Rs.10000? (ii) How, much would you pay if your level of wealth were Rs.1000000? 8 Marks) OR and that Assume that you have a logarithmic utility function for wealth U/W)- you are faced with a 50/50 chance of wining and losing Rs.1000 (i How much will you pay to avoid this risk if your current level of wealth is 8 Marks) (ii) () How much would you pay if your level of wealth were Rs.1000000? (8 Marks) Rs.10000

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