The minimum guaranteed amount you are willing to accept to avoid the risk associated with a gamble is referred to as the ________.
A)risk premium
B)certainty equivalent
C)EVPI
D)EMV
E)EVSI

Question

Quizplus · Accepted Answer

The minimum guaranteed amount is known as the certainty equivalent. This represents the amount of money that an individual would be willing to accept with certainty rather than take a risk on a gamble. A risk premium is the additional amount an investor requires to undertake a risky investment relative to a risk-free one. EVPI (Expected Value of Perfect Information) is the maximum amount that an individual would be willing to pay to have perfect information before making a decision. EMV (Expected Monetary Value) is the average outcome when we take into account the probability of each possible outcome. EVSI (Expected Value of Sample Information) is the additional value of information that we would obtain from looking at a sample instead of having no information at all.

The Minimum Guaranteed Amount You Are Willing to Accept to Avoid