For each of the following 3 alternatives choose one of the 2 options by circling either...
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For each of the following 3 alternatives choose one of the 2 options by circling either a) or b). For each choice calculate the expected value (EV) and briefly explain your logic. Note the amount certain is also an expected value. 1. a) $50,000 OR b) a coin single flip with a i) 50% chance of $90,000 (Heads) il) 50% chance of $17,500 (Tails) EV = $ 2. a) $50,000 OR b) 10 coin flips each of which has a i) 50% chance of $9,000 (Heads) II) 50% chance of $1,750 (Tails) EV = $ 3. a) $50,000 OR b) 100 coin flips each of which has a 1) 50% chance of $900 (Heads) il) 50% chance of $175 (Tails) For each of the following 3 alternatives choose one of the 2 options by circling either a) or b). For each choice calculate the expected value (EV) and briefly explain your logic. Note the amount certain is also an expected value. 1. a) $50,000 OR b) a coin single flip with a i) 50% chance of $90,000 (Heads) il) 50% chance of $17,500 (Tails) EV = $ 2. a) $50,000 OR b) 10 coin flips each of which has a i) 50% chance of $9,000 (Heads) II) 50% chance of $1,750 (Tails) EV = $ 3. a) $50,000 OR b) 100 coin flips each of which has a 1) 50% chance of $900 (Heads) il) 50% chance of $175 (Tails)
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1 EVS For A50000 B0509000005017500 33750 if I was a risk averse I would choose option A since there ... View the full answer
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
Posted Date:
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