Joeng asks Zhou about the risk premium on an asset. Specifically, Joeng wants to know the impact on the risk premium if an asset’s future value is negatively correlated with investors’ utility from future consumption.
The answer was the risk premium should be higher while I chose " risk premium should be lower".
Every time I do questions asking about these relationships. I get them wrong and I am pretty sure the explanation and the underlying behind this concept are much simpler. But I can’t seem to get it right
What’s the simplest way to tackle this concept?