Daria Gavrilova has an expected utility function, E(U), that looks like: E(U()) = E(Log10()) where income ()

Daria Gavrilova has an expected utility function, E(U), that looks like:
E(U(π)) = E(Log10(π))
where income (π) is measured in Australian dollars. She expects the following income distribution based on her latest performance at the Grand Slam:

i. What is Daria’s expected money value? (3 Marks)
ii. What is Daria’s expected utility in overall? (5 Marks)
iii. What is Daria’s certainty equivalent income? Explain its meaning. Note: you can check the required Log10 value in Table Appendix 2 (5 Marks)
iv. What is Daria’s risk premium associated with this income distribution? Explain its meaning. (2 Marks)

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Table 2. Daria's Income, Probability and Expected Utility in each case. Probability E(U)=Log10 (7) 0.30 0.50 0.20 Income $300,000 $400,000 $500,000 5.48 5.60 5.70 Table 2. Daria's Income, Probability and Expected Utility in each case. Probability E(U)=Log10 (7) 0.30 0.50 0.20 Income $300,000 $400,000 $500,000 5.48 5.60 5.70

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i What is Darias expected money value show calculations Darias expected money value is 400000 This i... View the full answer