For clarification u(w) = 1 - e^(a₀w)

= Let the utility function of an investor be u(w) 1 - e-a,w (exponential utility function), where w is wealth and where aa is a positive number. Let W. (> 0) be the initial wealth the investor has for investment. Assume that the investor is an expected utility maximizer. Suppose that the investor rejects an investment opportunity (110,-100; 0.5, 0.5), j.e. 50% probability to win 110 and 50% probability to lose 100. a. Explain why a, could not be small than 0.0009. Now suppose the investor whose ag= 0.001 is facing another investment opportunity (G, 1000; 0.5,0.5) where G is a very large positive number, say tens of million. b. Discuss, with reasons, whether the investor will take this opportunity? = Let the utility function of an investor be u(w) 1 - e-a,w (exponential utility function), where w is wealth and where aa is a positive number. Let W. (> 0) be the initial wealth the investor has for investment. Assume that the investor is an expected utility maximizer. Suppose that the investor rejects an investment opportunity (110,-100; 0.5, 0.5), j.e. 50% probability to win 110 and 50% probability to lose 100. a. Explain why a, could not be small than 0.0009. Now suppose the investor whose ag= 0.001 is facing another investment opportunity (G, 1000; 0.5,0.5) where G is a very large positive number, say tens of million. b. Discuss, with reasons, whether the investor will take this opportunity