Question: Expected Utility, Certainty Equivalent & Risk Premium (8 points). Consider a lottery involving either a gain of $15 or a loss of $15 with equal

Expected Utility, Certainty Equivalent & Risk Premium (8 points). Consider a lottery involving either a gain of $15 or a loss of $15 with equal chance.

a.Find the expected utility, certainty equivalent, and risk premium of this lottery for an individual with riskless assets of $100 and a utility function of . ()=ln()

b.Now do the exact same for an individual with riskless assets of $50 instead of $100

Comparing a. and b., how does the reduction in riskless assets affect the individuals degree of risk aversion? Explain intuitively why this is the case

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