(20 points) Duncan Laurence, a recent winner of Eurovision Song Contest, has recorded a new album. Sony Music Entertainment has offered Duncan $200 million for rights to the album, while Warner Music Group has offered him a contract where he gets $100 million, plus an additional $200 million if the album sells more than 100,000 copies.

Which of the following are true:

A. If Duncan thinks he will sell more than 100,000 copies 60% of the time and signs with Sony, then he must be risk averse.

B. If Duncan thinks he will sell more than 100,000 copies 40% of the time and signs with Sony, then he must be risk averse.

C. If Duncan thinks he will sell more than 100,000 copies 60% of the time and signs with Warner, then he must be risk loving.

D. If Duncan thinks he will sell more than 100,000 copies 50% of the time and signs with Warner, then he must be risk loving.

E. both (a) and (d) are correct.

Choose the single best answer and explain your choice