Problem 2 [50I points] Suppose that Eva's utility function is given by UH) = [0.5. where I represents annual income. 1. Is Eva risk-loving. riskneutral, or riskaverse? Explain. ['l 0 points] 2. Suppose that Eva is currently earning an income of$400.000 and can earn that income next year with certainty. She is offered a chance to take a new job that offers a 0.2 probability of earning $440,000 and a 0.8 probability of earning $330,000. Should she take the new job? Explain. [20 points] 3. In [2). would Eva be willing to buy insurance to protect against the variable income associated with the new job? If so. how much would she be willing to pa}.r for that insurance? (Hint: What is the risk premium?) [20 points]