A person has a chance to invest $50,000 in a business venture. If the venture works, the investor will reap $200,000. If the venture fails, the investor will lose his money. It appears that there is about a 0.50 probability of the venture working. Using this information, answer the following questions.
a. What is the EMV of this investment?
b. If this person decides not to undertake this venture, is he an EM Ver, a risk avoider, or a risk taker? Why?
c. You would have to offer at least how much money to get a risk taker to quit pursuing this investment?