Expected utility, certainty equivalent and risk premium. For this question, it is particularly important that you store exact numbers in your calculator to avoid rounding errors. Consider a gamble, in which you either gain $30 or lose $30 with equal chance:

A) Find the expected utility, certainty equivalent, and risk premium of this gamble for an individual with riskless assets of $80 and a utility function of, where is final wealth.

B) Repeat your calculations in a. for an individual with riskless assets of $40 instead of $80. The utility function is still, where is terminal wealth.

C) Comparing a . and b., how does the reduction in riskless assets affect the individual's risk aversion? Explain intuitively why this is the case.