5. (20) (a) Compute the (absolute) risk aversion measure r(W) of utility function -ea. Is r(W) dependent on W? -al (b) Compute the RELATIVE risk aversion measure rr(W) of the following utility function (the form of which depends on the value of r.

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20) (a) Compute the (absolute) risk aversion measure r(W) of utility function . Is r(W) Wedependent on W?(b) Compute the RELATIVE risk aversion measure rr(W) of the following utility function (the form of which depends on the value of .
 
 
10,11ln1WWIs rr(W) dependent on W?
**5. (20)** 

(a) Compute the (absolute) risk aversion measure \( r(W) \) of the utility function \(-e^{-0.07W}\). Is \( r(W) \) dependent on \( W \)?

(b) Compute the RELATIVE risk aversion measure \( rr(W) \) of the following utility function (the form of which depends on the value of \( \gamma \)).
Transcribed Image Text:**5. (20)** (a) Compute the (absolute) risk aversion measure \( r(W) \) of the utility function \(-e^{-0.07W}\). Is \( r(W) \) dependent on \( W \)? (b) Compute the RELATIVE risk aversion measure \( rr(W) \) of the following utility function (the form of which depends on the value of \( \gamma \)).
The image contains mathematical expressions regarding the function \(\pi(W)\). It is a piecewise function defined as follows:

- For \(\gamma \geq 0, \gamma \neq 1\):
  \[
  \pi(W) = \frac{W^{1-\gamma} - 1}{1 - \gamma}
  \]

- For \(\gamma = 1\):
  \[
  \pi(W) = \ln W
  \]

The text poses a question: "Is \(\pi(W)\) dependent on \(W\)?"

This function consists of two parts based on the value of \(\gamma\) and explores its dependency on the variable \(W\).
Transcribed Image Text:The image contains mathematical expressions regarding the function \(\pi(W)\). It is a piecewise function defined as follows: - For \(\gamma \geq 0, \gamma \neq 1\): \[ \pi(W) = \frac{W^{1-\gamma} - 1}{1 - \gamma} \] - For \(\gamma = 1\): \[ \pi(W) = \ln W \] The text poses a question: "Is \(\pi(W)\) dependent on \(W\)?" This function consists of two parts based on the value of \(\gamma\) and explores its dependency on the variable \(W\).
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