Q 1.On any given day, a salesman can earn $0 with a 30% probability, $100 with a 20% probability, or $300 with a 50% probability. His expected earnings equal 2. John's utility from an additional dollar increases more when he has $1,000 than when he has $10,000. From this, we can conclude that John 3. Natasha is going to buy a risky asset that has an expected value of $62, which yields an expected utility of 146. Equivalently, she could get utility of 146 from a certainty equivalent of $43. What is Natasha's risk premium? 4. If two events are perfectly negatively correlated, then 5. If your risk of losing your house to catastrophe is 25%, how much would fair insurance cost if your home were worth $1,000,000?

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