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3. [2 points] Figure shows a payoff of CEO compensation contract based on stock price at maturity of the contract. Suppose the CEO has two
3. [2 points] Figure shows a payoff of CEO compensation contract based on stock price at maturity of the contract. Suppose the CEO has two project choices: A and B. Which project will be chosen by the CEO between the following projects? Project A: Stock price at maturity will be $1.2 (100% probability) Project B: Stock price will be either $0 (50% probability) or $2 (50% probability) 2 Project A/Project B (circle one) 1.5 Expected Profit from Project A: Expected Profit from Project B: O 0.5 00.5 1.5 Stock Price at Maturity 2
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