Mike has a utility function expressed by U(W)= W^0.5, where W stands for wealth (assuming wealth is positive, i.e. W>0), and U(W) is the utility given a certain level of W. Mike has initial wealth of $10,000. Mike feels that he faces the following probability distributions of losses with respect to his wealth:

Loss Amount ($) Probability

$0 70%

$1,000 20%

$8,000 10%

What is Mikes standard deviation of the loss?

	$0
	$2,366
	$3,098
	$7,071