Exponential utility has an adjustable parameter called risk tolerance. the risk tolerance parameter measures an appropriate value for company.
In economics and finance, exponential utility is a particular form of utility function that is useful in some contexts when risk (also called uncertainty) is present. In this case, the expected utility is maximized. A utility function measures the preferences consumers apply to their consumption of goods and services. For example, if a customer prefers apples to oranges regardless of consumption, the utility function can be expressed as he U(apple) > U(orange).
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