Question: A firm is considering two projects, A and B , with the following probability distributions for profit. Profit ($1,000s) Project A Probability (%) Project B

A firm is considering two projects, A and B, with the following probability distributions for profit.

Profit ($1,000s) Project A Probability (%) Project B Probability (%)
$20 10 10
40 15 15
60 50 25
80 15 40
100 10 10

Given the information in the table, a decision maker who is risk neutral would

Multiple Choice

  • choose project A.
  • choose project B.

change probabilities because no decision maker is ever risk neutral.

not be able to make a decision.

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