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 use binomial calculator to determine your answer

1. a) $50,000

OR

b) a single coin flip with a

1. 50% chance of $90,000 (Heads)

2. 50% chance of $30,000 (Tails)

EV = $

Briefly explain your choice: (2 points)