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%

Is Mike a risk averse person?

Question 9 options:

	Yes, since his utility curve is convex.
	No, since his utility curve is convex.
	Yes, since his utility curve is concave.
	No, since his utility curve is concave.