What role do ratings agencies such as Moody's, Fitch Ratings, and Standard & Poor's play in the California budgeting process? They have a line-item veto on expenditures in the budget passed by the legislature. They determine the constitutionality of budget provisions or propositions. They provide guidance to the legislature on which expenditures are most cost effective. They release information to the public on how likely California is to repay its bonds.

Your company is starting a new r& d initiative: a development of a new drug that dramatically reduces the addiction to smoking. the expert team estimates the probability of developing the drug succesfully at 60% and a chance of losing the investment of 40%. if the project is successful, your company would earn profits (after deducting the investment) of 9,000 (thousand usd). if the development is unsuccessful, the whole investment will be lost -1,000 (thousand usd). your company's risk preference is given by the expected utility function: u(x) v1000 +x, where x is the monetary outcome of a project. calculate the expected profit of the project . calculate the expected utility of the project . find the certainty equivalent of this r& d initiative . find the risk premium of this r& d initiative e is the company risk-averse, risk-loving or risk-neutral? why do you think so?