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4.14. Given the following probability distributions for risky payoffs x and : X Probability (x) -10 z Probability (z) 5 10 1432 2521 2340
4.14. Given the following probability distributions for risky payoffs x and : X Probability (x) -10 z Probability (z) 5 10 1432 2521 2340 12 a. If the only available choice is 100% of your wealth in x or 100 % in z and you choose on the basis of mean and variance, which asset is preferred? b. According to the second-order stochastic dominance criterion, how would you compare them?
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