Question: A1 X V fx A B C D E F G H UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT Chapter 5 -- Financial Risk and Required Return PROBLEM

A1 X V fx A B C D E F G H UNDERSTANDING HEALTHCARE FINANCIAL MANAGEMENT Chapter 5 -- Financial Risk and Required Return PROBLEM 2 Suppose that a person won the Florida lottery and was offered a choice of two prizes: (1) sure 7 $500,000 or (2) a coin-toss gamble in which he or she would get $1 million if a head were flipped 8 and zero if a tail. 9 a. What is the expected dollar return on the gamble? 10 b. Would the person choose the sure $500,000 or the gamble? 11 c. If he or she chooses the sure $500,000, is the person a risk averter or a risk seeker? 12 13 ANSWER 14 15 16

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