5%20

20%50

75%-30

Tom gets a lottery (shown above) for free, and he is considering whether or not he should play this lottery. If Tom plays this lottery, there will be a 5% chance that he will earn 20, a 20% chance that he will earn 50, and a 75% chance that he will lose 30.

What is Tom's risk attitude if he wants to play this lottery?

Select one:

a.

Tome is both risk neutral and risk loving.

b.

Tom is risk neutral.

c.

Tom is risk averse.

d.

Tom is risk loving.

e.

Tom is both risk averse and risk neutral.