Hello, I need help understanding how to set up the problem for 9a ONLY. Does this problem require a graph? in the formula: do I plug in 0.05 for 'x'? ... Thank you in advance.

9. Prudent plans to invest $6,000 in one of the following instruments: - Bonds of J Ltd., yielding 12%(a1) - Canada Savings Bonds, yielding 9%(a2) On the basis of his knowledge of current economic conditions and the outlook for the industry of J Ltd., Prudent assesses the prior probability that J Ltd. will go bankrupt as 0.05. If this happens, Prudent will lose both principal and interest and receive no money at the end of the year. If J Ltd. does not go bankrupt, Prudent plans to sell the bonds, plus interest, at the end of one year. Prudent assesses the probability that the Canada Savings Bonds will fail to pay off as zero. Prudent also plans to sell these, plus interest, one year later. Prudent is risk-averse and decides to choose the investment that yields the highest expected utility. Assume that Prudent's utility for an amount of $x is given by x, where x is the gross payoff. Required a. On the basis of his prior probabilities, which investment should Prudent choose? b. Rather than choosing on the basis of his prior probabilities, assume that Prudent decides to analyze the current financial statements of J Ltd. These financial statements can look The Decision-usefulness Approach to Financial Reporting 9. Prudent plans to invest $6,000 in one of the following instruments: - Bonds of J Ltd., yielding 12%(a1) - Canada Savings Bonds, yielding 9%(a2) On the basis of his knowledge of current economic conditions and the outlook for the industry of J Ltd., Prudent assesses the prior probability that J Ltd. will go bankrupt as 0.05. If this happens, Prudent will lose both principal and interest and receive no money at the end of the year. If J Ltd. does not go bankrupt, Prudent plans to sell the bonds, plus interest, at the end of one year. Prudent assesses the probability that the Canada Savings Bonds will fail to pay off as zero. Prudent also plans to sell these, plus interest, one year later. Prudent is risk-averse and decides to choose the investment that yields the highest expected utility. Assume that Prudent's utility for an amount of $x is given by x, where x is the gross payoff. Required a. On the basis of his prior probabilities, which investment should Prudent choose? b. Rather than choosing on the basis of his prior probabilities, assume that Prudent decides to analyze the current financial statements of J Ltd. These financial statements can look The Decision-usefulness Approach to Financial Reporting