=+b.

What is the value of perfect information?

C.

Assume the investor can privately contract to obtain ABC Company's profit forecast for the next year. If default were not to occur, there is an estimated probability of .8 that the profit forecast would be posi-

tive, and a .2 probability it would be negative. If default were to occur, the probability of a positive forecast is .4, while the probability is .6 that the profit forecast would be negative. Calculate the utility of each investment based on the new information.