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1) Consider a lottery with three possible payouts: $100 with a chance of 25%, $75 with a chance of 40% and $ 50 with a
1) Consider a lottery with three possible payouts: $100 with a chance of 25%, $75 with a chance of 40% and $ 50 with a chance of 35%.
A) What is the expected monetary value (EMV) of this lottery? Please enter your answer rounded to 2 decimal places.
B) What is the maximum amount that a risk neutral person would pay to play this lottery? Please enter your answer rounded to 2 decimal places.
2) Rita is presented with the following gamble. Please answer the following questions based on the provided gamble:
$500 for sure 1/6 chance of $700 and 5/6 chance of $300 $500 for sure 2/6 chance of $700 and 4/6 chance of $300 $500 for sure 3/6 chance of $700 and 3/6 chance of $300 $500 for sure 4/6 chance of $700 and 2/6 DECiSiOH 4 chance of $300 $500 for sure 5/6 chance of $700 and 1/6 Decision 5 chance of $300 $500 for sure 6/6 chance of $700 and zero Decision 6 chance of $300Step by Step Solution
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