1.

U(x)=√x
Utility of Option1=√10,000= 100
Utility of Option2 =0.99*√0 +0.01*√1,000,000=10
Since utility is more, she prefers Option1.
She is Risk-averse.
U(CE)=√CE
Utility of the lottery =10
√CE = 10 => CE = 100
The certainty equivalent is 100.
2. U(x) = x2
Utility of Option1=10,0002= 108
Utility of Option2 =0.99*02 +0.01*1,000,0002 =1010
Since utility is more, she prefers Option2.
She is Risk-loving.
U(CE)=√CE
Utility of the lottery =1010
√CE = 1010 => CE = 1020
The certainty equivalent is 1020
3. U(x)=x
Utility of Option1=10,000
Utility of Option2 =0.99*0 +0.01*1,000,000=10,000
Since utility is equal, there is no specific choice.
She is Risk- neutral.
The certainty equivalent is also 10,000.