Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. if the measure of risk aversion in picture is a = 4: a. what would be a reasonable guess for the expected market risk premium? market risk premium 0.08 % b. what value of a is consistent with a risk premium of 9%? (round your answer to 2 decimal places.) consistent value of a 2.25 c. what will happen to the risk premium if investors become more risk tolerant? increased risk tolerance means decreased risk aversion (a), which results in a(n) in risk premiums.

The monthly demand equation for an electric utility company is estimated to be p equals 60 minus left parenthesis 10 superscript negative 5 baseline right parenthesis x, where p is measured in dollars and x is measured in thousands of killowatt-hours. the utility has fixed costs of $3 comma 000 comma 000 per month and variable costs of $32 per 1000 kilowatt-hours of electricity generated, so the cost function is upper c left parenthesis x right parenthesis equals 3 times 10 superscript 6 baseline plus 32 x. (a) find the value of x and the corresponding price for 1000 kilowatt-hours that maximize the utility's profit. (b) suppose that the rising fuel costs increase the utility's variable costs from $32 to $38, so its new cost function is upper c 1 left parenthesis x right parenthesis equals 3 times 10 superscript 6 baseline plus 38 x. should the utility pass all this increase of $6 per thousand kilowatt-hours on to the consumers?