Question: Question 8 Alexa has an expected utility function of the form u(I) = 1/2. His initial income is $20 000. He has a bond that

Question 8 Alexa has an expected utility function of the form

Question 8 Alexa has an expected utility function of the form u(I) = 1/2. His initial income is $20 000. He has a bond that will pay out $12 400 with probability 1/3 and $2 500 with probability 2/3. a.) Does Alexa risk-averse, risk-lover, or risk-neutral? Justify your answer. b.) What is Alexa's expected utility? c.) What is the lowest price p Alexa would be willing to accept for the bond

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