Question: An investor has a utility function given as u(w) = w 0.3 and they presently have a wealth of $40,000 but face a 5% chance

An investor has a utility function given as u(w) = w^0.3 and they presently have a wealth of $40,000 but face a 5% chance of losing a $4000 deposit they put on a vacation. What is the maximum they would be willing to pay for cancellation insurance?

$0
$192.95
$200
$207.05
$4000

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