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3. Venture limited is a company with net sales of $0. The company currently must decide whether to enter one of two risky ventures or

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3. Venture limited is a company with net sales of $0. The company currently must decide whether to enter one of two risky ventures or invest in a sure thing. The gain from the latter is a sure $125,000. The possible outcomes for the less risky venture are a $0.5 million loss, a $0.1 million gain, and a $1 million gain which the company believes will happen with probabilities of .25, .5, and 25 respectively. The possible outcomes of the more risky venture are a $1 million loss, a $1 million gain, and a $3 million gain, which the company believe will happen with probabilities.35.60, and .05, respectively. If Venture can pick exactly one of these alternative, what should they do... (a) If they are risk neutral. (b) if they are risk averse with utility given by u(W) = 1-e-W/1920 where units are expressed in $1000s of dollars. Assume ititial wealth is zero

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