Question: Problem 3 Tomorrow, an asset will be worth either $40 or $20. Jack tells you that he Will only buy some share of the asset

Problem 3 Tomorrow, an asset will be worth either $40 or $20. Jack tells you that he Will only buy some share of the asset if today's price is no higher than $25. (i) Suppose Jack is a riskaverse expectedutility maximizer. What do you learn about J ack's preferences? Be as specic as you can. Suppose when the NYSE opens, today's price of the asset is actually $30. What should Jack do? (ii) When today's price is announced to be $30, Jack actually says that he does not want to trade the asset at all. What do you learn about J ack's preferences now? Be as specic as you can

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