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1. Consider a lottery with three possible outcomes: $125 will be received with probability 0.2 $100 will be received with probability 0.3 . $50 will

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1. Consider a lottery with three possible outcomes: $125 will be received with probability 0.2 $100 will be received with probability 0.3 . $50 will be received with probability 0.5 a. What is the expected value of the lottery? b. What is the variance of the outcomes? (Hint: the variance is the square of the standard deviation.) c. What would a risk neutral person pay to play the lottery

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