Economics · Risk Aversion Measures
The Arrow-Pratt measure of absolute risk aversion, RA(W), is defined as:
- 1−U''(W)/U(W)
- 2U''(W)/U'(W)
- 3−U''(W)/U'(W)✓
- 4U'(W)/U''(W)
Correct answer
−U''(W)/U'(W)
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