1.Horatio has a utility function given as u(x) = -e^-gx.Assuming he has no initial wealth andg= 0.05, what is the maximum dollar amount he'd bewilling(not able) to pay for a game that pays $10 half of the time and $0 the remainder?

1.A mutual fund manager is trying to determine how much cash to keep on hand to meet monthly liquidation demands and has computed the likelihood of four different ranges of monthly cash demands:

Monthly cash outflow

<$70K

[$70K,$200K[

[$200K,$500K]

>$500K

Probability respectively

15%

40%

35%

10%

1. How much cash must the manager keep on hand to meet 55% of the withdrawal demands and which assumption must he have evoked?

A)He must maintain at least $70K and has evoked the assumption that the past is equal to the future

B)He must maintain at almost $200K and has evoked the assumption that the past is equal to the future

C)He must maintain $500K and has evoked the assumption that the past is equal to the future

D)He must maintain almost $200K and has evoked the assumption that the past is representative of the future

E)He must maintain $500K and has evoked the assumption that the past is representative of the future