6) Leia has $11,000 and she wants to invest in financial market. There are two types of assets. The first one guarantees 0.1 percent return next year. The second one is a risky asset which will yield...

Extracted text: 6) Leia has $11,000 and she wants to invest in financial market. There are two types of assets. The first one guarantees 0.1 percent return next year. The second one is a risky asset which will yield 0.5 percent return in good times and 0.4 percent of loss in bad times. Suppose the chance of good and bad times is half-half and Leia's utility function is U(Y) = Y 0.5 a). What is the expected utility if she invest in the first asset? b). What is the expected utility if she invest in the second asset? Will Leia chooses the first or the second asset? c). Suppose that Leia can purchase a financial insurance which cost her $100 and cover all her lost when bad times happen. Will she purchase this insurance?