SOLVED: Assessed risk tolerance of Cathy is $8700. Assume that her preferences can be modeled with the exponential utility function U(x) = 2.5700 – 1.8200e–x/R

Assessed risk tolerance of Cathy is $8700. Assume that her preferences can be modeled with
the exponential utility function U(x) = 2.5700 – 1.8200e–x/R

Suppose that she faces the following gamble:
Win $3213.03 with probability 0.30, Lose $1269.79 with probability 0.15, Win $1887.74 with
probability 0.20, Win nothing with probability 0.15, and Lose $811.79 with probability 0.20.
1) What is the expected utility of the gamble?
a. 0.7986
b. 0.9111
c. 0.6842
d. 1.3000
e. 0.5000