Question: You are a hotel manager considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential

You are a hotel manager considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the following table.

Project Boom (50%) Recession (50%)

A $40 -$20

B -$10 $30

C $50 -$50

D $60 $60

Which of the following statements is true?

Multiple Choice

A risk-loving manager will prefer project D.
A risk-averse manager will prefer project D.
All of the statements are correct.
A risk-neutral manager will prefer project D.

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