Question: Question 11. (40 points total) Owen is offered a choice over two lotteries: Lottery A: A 50% chance of $9 and a 50% chance of

Question 11. (40 points total) Owen is offered a choice over two lotteries: Lottery A: A 50% chance of $9 and a 50% chance of $36. Lottery B: A 70% chance of $0 and a 30% chance of $100. A. (10 points) What is the expected value of lottery A? of lottery B? B. (10 points) Owen maximizes expected utility and his utility over wealth can be represented by the utility function, U(W)=W1/2. What type of risk preferences does Owen have i.e., is he risk loving, risk neutral or risk averse? Prove your answer. C. (10 points) Which lottery will Owen prefer? Explain your answer carefully. D. (10 points) Which would Owen prefer: lottery B or $8 for sure? Explain your answer carefully.

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