(Answered) Expected value of wealth- graph utility function- risk levels- certainty equivalent

Consider a person with the following utility function over wealth: u(w)=e^w, where e is the exponential function (approximately equal to 2.7183) and w=wealth in hundreds of thousand of dollars. Supose that this person has a 40% chance of wealth of $50,000 and a 60% chance of wealth of $1,000,000 as summarized by;P(0.40, %50,000, $1,000,000).;A. What is the expected value of wealth?;B. Construct a graph of this utility function.;C. Is this person risk averse, risk neutral, or a risk seeker?;D. What is this person's certainty equivalent for the prospect?
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Expected value of wealth- graph utility function- risk levels- certainty equivalent

 


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