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Question 6 Part A [5 marks] Consider a person's choice between prospect A : (0, 1, 0; $30, $20, $0) and prospect B = (0.2, 07, 01; $30, $20, $0). If A > B, what can you say about their attitude toward risk? Is there a certainty equivalent alternative to B? Show graphically. Part B [5 marks] A business offers its employees a set of savings plans, The rst plan involves a mutual fund that has historically yielded a return of 10 percent with a probability of 0.5 and a negative 1 percent return with a probability of 0.5. The second plan is a money market fund that yields an interest rate of 5 percent with certainty. Consider an individual with the utility function: al.- 11211] IF w is Wealth, and the individual is looking to invest $1,000 for one year7 which option will he/ she choose? HINT: use the timevalue of money equation: FV = PV[1 + i)