Explain in your own words the idea of risk tolerance

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Question: 1. Explain in your own words the idea of risk tolerance. How would it apply to utility functions other than the exponential utility function?

2. Suppose a decision maker has the utility function shown in Table. An investment opportunity has EMV = $1,236 and EU = 0.93. Find the CE for this investment and the risk premium.

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Reference no: EM131524461

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