2. Three investors have bought ETFs at a value of $40,000. The price went up to...

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2. Three investors have bought ETFs at a value of $40,000. The price went up to $70,000 and then dropped to $50,000, at which time they sold it. All three are loss averse and have the following value function: v(w) = w = 2w when w> 0 when w < 0 The first investor uses the purchase price as her reference point. The second uses the peak price as her reference point, and the third uses the sale price as reference point. What is the change in value for each person? Who is happiest? 2. Three investors have bought ETFs at a value of $40,000. The price went up to $70,000 and then dropped to $50,000, at which time they sold it. All three are loss averse and have the following value function: v(w) = w = 2w when w> 0 when w < 0 The first investor uses the purchase price as her reference point. The second uses the peak price as her reference point, and the third uses the sale price as reference point. What is the change in value for each person? Who is happiest?

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To determine the change in value for each person and identify who is happiest lets calculate the val... View the full answer