(1.3) Let u = w2 for w 0. (a) Compute the exact risk premium if initial wealth is 4 and if a decision maker faces the lottery (−2, 1 2 ; +2, 1 2 ). Explain why the risk premium is negative. (b) If the utility function becomes v = w4, what happens to the risk pre- mium? Show that v is a convex transformation of u.

When it is 4: 00 a.m. in halifax, it is 1: 00 p.m. in karachi, and when it is 9: 00 a.m. in karachi, it is 5: 00 a.m. in warsaw. mary left halifax to fly to karachi, but she accidentally left her watch on warsaw time. according to mary’s watch, she left halifax at 9: 40 p.m. on monday. the local time when she arrived at karachi was 3: 00 p.m. tuesday. how long was mary’s flight? a. 9 hours, 20 minutes b. 13 hours, 20 minutes c. 14 hours, 20 minutes d. 17 hours, 20 minutes