The sum received with certainty that makes one indifferent to the expected return from risky lottery is known as
A) certainty equivalence.
B) certainty premium.
C) risk premium.
D) risk equivalence.

Question

Quizplus · Accepted Answer

Certainty equivalence is the guaranteed amount of money that an individual would accept instead of taking a gamble with higher potential returns, indicating the individual's risk tolerance.

The Sum Received with Certainty That Makes One Indifferent to the Expected