For constants a and b,0

Question

For constants a and b,0 < b,b $\neq$ 1,and expected profit E($\pi$),the expected utility function of a person who is risk-neutral can be written as E(U)= : A) a + bE($\pi$). B) a - bE($\pi$). C) a + b^$\pi$. D) a + [E($\pi$)]^b. E) a + [E($\pi$)]^-^b.

Quizplus · Accepted Answer

The expected utility function of a person who is risk-neutral is simply the expected profit multiplied by a constant. Therefore, the correct answer is A, where the expected profit is multiplied by constant b and added to constant a.

For Constants a and B,0 < B,b ≠\neq= 1,and Expected Profit E

For Constants a and B,0 < B,b $\neq$ 1,and Expected Profit E