Use the following information to answer question. Assume an investor has the utility function W 1/3 ,
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Use the following information to answer question. Assume an investor has the utility function W1/3, where W is wealth. The state government issues a lottery ticket that pays the winner $300. The lottery ticket costs $1. The chance of winning the lottery is 1/200. The investor has $270 in original wealth.
What is the expected value of this lottery? What is the investor’s expected utility if he buys the lottery?
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Related Book For
Statistics For Business And Financial Economics
ISBN: 9781461458975
3rd Edition
Authors: Cheng Few Lee , John C Lee , Alice C Lee
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