BE312 Quantitative Foundations of Finance

Individual Coursework Question 1: Compare and contrast a person who is risk averse to a person who is a risk lover. Provide, with an example to illustrate your understanding, an economic explanation of when an individual is risk averse or risk loving. Question 2: Define maximum expected utility for consumers. Is there a situation where a person might not maximise his/her expected utility? Justify your answer. Question 3:Evaluate this statement “An insurance company is likely to behave as if it is risk neutral even if its managers are risk-averse individuals