Question: 13. A person with natural logarithmic utility (ln function) has current net wealth of $50 and is also given a lottery ticket that pays $20

13. A person with natural logarithmic utility (ln function) has current net wealth of $50 and is also given a lottery ticket that pays $20 20% of the time and $0 80% of the time. What is the minimum price this person would accept to sell their lottery ticket?

$0, this person hates risk of any kind and will be happy to rid themselves of the uncertainty

$1.82

$3.71

$4.00

$4.64

please show work.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

13. A person with natural logarithmic utility (ln function) has current net wealth of $50 and is also given a lottery ticket that pays $20 20% of the time and $0 80% of the time. What is the minimum...

Q:

A person with natural logarithmic utility (ln function) has current net wealth of $50 and is also given a lottery ticket that pays $20 20% of the time and $0 80% of the time. What is the minimum...

Q:

A person with natural logarithmic utility (ln function) has current net wealth of $50 and is also given a lottery ticket that pays $20 20% of the time and $0 80% of the time. What is the minimum...

Q:

A person with natural logarithmic utility (ln function) has current net wealth of $50 and is also given a lottery ticket that pays $20 20% of the time and $0 80% of the time. What is the minimum...

Q:

A person with natural logarithmic utility (ln function) u(x) = ln(x) has current net wealth of $50 and is also given a lottery ticket that pays $20 20% of the time and $0 80% of the time. What is the...

Q:

answers shd be only handwritten Hassan and Dana had bought a property valued at $1,225,000 for 20% down and a mortgage amortized over 25 years on March 1, 2018. They made equal end-of-month payments...

Q:

Hi! Help me please Problem 2. Intertemporal choice Mainy Landin has an income of 200.000 kr this year and she expects an income of 110.000 kr next year. She can borrow and lend money at an interest...

Q:

832 Chapter 13 Exponential and Logarithmic Functions IMPORTANT FACTS AND CONCEPTS EXAMPLES Section 13.6 Properties for Solving Exponential and Logarithmic Equations a) If x = y, then ax = ay. a) If x...

Q:

fi 4.3. Risk premium: A businesswoman runs a firm worth CHF 100,000. She faces some risk of having a fire that would reduce her net worth according to the following three states, i = 1,2,3, each with...

Q:

Salaam sir, You have helped me previously with a tax return problem, and now I have another problem set that builds upon the previous problem. I am wondering if you can take a look at the attached...

Q:

How should gains or losses related to pension plan assets be recognized? How does this treatment compare to that for gains or losses related to the pension obligation?

Q:

Landson company is an industrial firm that specialize in producing household cleaning products, steve is the financial manager of the company and one of his strategies to use the extra cash is to...

Q:

a medical expense incurred and charged on a credit card this year is considered paid when the credit card balance is paid next year. true or false

Q:

Help with this accounting question! Drag Strip, a regional convenience store chain, maintains milk inventory by the gallon. The first month's milk purchases and sales at its Denver, Colorado,...

Q:

LO41.2 Analyze the balance sheet the United States uses to account for the international payments it makes and receives.

Q:

7. We see quite a bit of international trade in the real world. And trade is driven by specialization. So why dont we see full specialization for instance, all cars in the world being made in South...

Q:

1. Assume that the comparative-cost ratios of two products baby formula and tuna fishare as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula 2 cans tuna fish Tunata: 1...