# Your utility function is M. Your current wealth is $400,000. There is a 0.00001 probability that your legal liability in an automobile accident will reduce your wealth to $0. What is the most you would pay for insurance to cover this risk?

Your utility function is √M. Your current wealth is $400,000. There is a 0.00001 probability that your legal liability in an automobile accident will reduce your wealth to $0. What is the most you would pay for insurance to cover this risk?

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