Question: Consider a risk averse individual called Anna with utility function u = Vw, where w is wealth. Anna has 150,000 in safe assets. She also

Consider a risk averse individual called Anna with utility function u = Vw, where w is wealth. Anna has 150,000 in safe assets. She also owns a house worth 300,000, and the probability it burns down and is totally written off is n = 0.01. a) (5 marks) Calculate Anna's expected utility if she does not buy insurance. b) (5 marks) Calculate the certainty equivalent of the lottery she faces if she does not buy insurance. c) (5 marks) Suppose that Anna can buy K worth of insurance at a cost of 0.005K. How much insurance will Anna buy

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