eertain equivalents Verify the certain equivalent eaIculations summarized in Table 18.2. Notice, in this case, the certain equivalents can be calculated in two ways. One method eaIculates the certain equivalent of the Ij lottery and then subtracts the

c. cost. The other method focuses directly on the certain equivalent of the lottery of net gains, Ij -

cl • Why are the two methods equivalent here?

AppendixLO1