38. Suppose a risky asset has two possible returns: 4 with probability 50% and 16 with probability 50%. Try to answer the following questions: 1). (4 points) What is the expected returns of this risky asset? 2). (4 points) If an insurance covers 100% of the expected return of this risky asset, then what is the actuarially fair premium for this insurance? 3). C4 points) Suppose a person has a utility function u(x) = Va. Here x is return. What is the expected utility of this person having this risky asset without any insurance for this asset? 4). (4 points) Suppose a person has a utility function w(x) = Vx. Here x is return. What is this person's certainty equivalence for this asset? In other words, find out the value of a fixed retum such that the utility from this return is equal to the expected utility you calculated in 3) above. 38. Suppose a risky asset has two possible returns: 4 with probability 50% and 16 with probability 50%. Try to answer the following questions: 1). (4 points) What is the expected returns of this risky asset? 2). (4 points) If an insurance covers 100% of the expected return of this risky asset, then what is the actuarially fair premium for this insurance? 3). C4 points) Suppose a person has a utility function u(x) = Va. Here x is return. What is the expected utility of this person having this risky asset without any insurance for this asset? 4). (4 points) Suppose a person has a utility function w(x) = Vx. Here x is return. What is this person's certainty equivalence for this asset? In other words, find out the value of a fixed retum such that the utility from this return is equal to the expected utility you calculated in 3) above