$ Answerallofthem 1.  Suppose  thatarisk-averse  individual  hasawealth  levelWo .  This  indi- vidual  hastheoption  ofinvesting  intherisk-freeassetwithareturnof (1+rf)                                                        (1) There  isanotherassetthatisriskywithareturnof(1+rh )inagoodstate withprobability1  and(1+rl )inabadstate  withprobability1.Theexpected 2 returnfromtheriskyassetis: 1 2 (1+rl )+ 2 […]