Quiz 21 ! Length : around 10 minutes Answer the questions. Several answers possible. What is risk aversion ? The theory relating to risk The attitude which consists in not liking risk The desire for risk The attitude which consists in refusing risk None An individual who is averse to risk will have the following utility function : concave linear convex None What is the certainty equivalent of a lottery ? It is the expectation of the lottery It is the certain amount which the individual is willing to receive rather than participate in that lottery. None What is the risk premium equal to ? It is the amount which the individual is willing to “lose” when he receives the certainty equivalent rather than participate in the lottery It is the “price” of risk It is the amount which the individual is willing to receive in order to receive the certainty equivalent rather than participate in the lottery It is the difference between lottery expectation and the certainty equivalent of that same lottery None A farmer has 1ha of land. He can either grow crop A which yields 4000€ per hectare once every 3 years and 10000€ per hectare twice every 3 years, or crop B which yields 7000€ per hectare every year.What is the gross margin of crop A ? A farmer has 1ha of land. He can either grow crop A which yields 4000€ per hectare once every 3 years and 10000€ per hectare twice every 3 years , or crop B which yields 7000€ per hectare every year.If he is impartial to risk, what will he choose to grow ? Crop A Crop B One or the other indifferently None farmer has 1ha of land. He can either grow crop A which yields 4000€ per hectare once every 3 years and 10000€ per hectare twice every 3 years, or crop B which yields 7000€ per hectare every year.The farmer chooses to grow crop B only, what can we say about him ? He likes risk He is impartial to risk He is averse to risk None Time's up
