Please answer fast please arjent help please answer fast Suppose Ilhan's utility function isU+0.5*Y^1/2, Ilhan's income is $125,000when healthy but only $60,000 when ill.Ilhan perceives probability of becoming ill isequal to 0.30. What is the actuarially fairpremium (AFP) and risk premium (RP) Ilhanwould be willing to pay?

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Answered: Suppose Ilhan's utility function is…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Suppose Ilhan's utility function is U+0.5*Y^1/2, Ilhan's income is $125,000 when healthy but only $60,000 when ill. Ilhan perceives probability of becoming ill is equal to 0.30. What is the actuarially fair premium (AFP) and risk premium (RP) Ilhan would be willing to pay?