Question: (a) A footballer's utility function is 011:} = Vb: . He earns $100 million a year if he is healthy, there is a 20% probability

(a) A footballer's utility function is 011:} = Vb: . He

(a) A footballer's utility function is 011:} = Vb: . He earns $100 million a year if he is healthy, there is a 20% probability that he will get injured and earn 50. Calculate the following: {i} Expected loss of the footballer. {2 marks} [ii] Without any.r insurance, calculate the expected utility of the footballer. (3 marks} (iii) What if the footballer purchases an insurance, calculate the expected utility of the footballer. [4 marks) (iv) If the insurance premium is currently at $35,000,000, determine whether the footballer will purchase the insurance. {4 marks]

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