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Figure 13.1 Risk aversion and the cost of risk bearing

Figure 13.1 Risk aversion and the cost of risk bearing. U. U(Y). U(Y 2 ). B. E. U(E[Y]). D. E(U). C. A. U(Y 1 ). 0. Y. Y*. Y 1. Y 2. Y**. Figure 13.2 Risk aversion, option price and option value. U. U(Y). U(A). A. C. N. U(N). 0. Y. Y*. Y N. Y A. Y**.

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