EXERCISE #2: Assuming that you are RISK AVERSE,

For each of the following alternatives choose one of the 2 options by circling either a) or b). For each choice calculate the expected value (EV) and briefly explain the logic of your choice.

Risky version isnt so risky most in two for calculator. Do it at least once

2. a) $50,000

OR

b) 10 coin flips each of which has a

1. 50% chance of $8,500 (Heads)

2. 50% chance of $2,500 (Tails)

EV = $

Briefly explain your choice: (2 points)