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A maximizing investor with an initial wealth of 300 dollars faces an investment opportunity. There is a 50 percent chance that an investment of X
A maximizing investor with an initial wealth of 300 dollars faces an investment opportunity. There is a 50 percent chance that an investment of X dollars could double to 2X and a 50 percent chance that her investment of X dollars would be worth O. Her Contingent Consumption utility function is u(c1, c2) = C1"c21-re where n is her subjective probability that state ci occurs because the investment is successful and (1-T) is her subjective probability that she loses her investment and state c2 occurs. Her subjective probability of success is equal to n = 28/40. How many dollars should she invest in this project? Round final answers to 2 decimals. A maximizing investor with an initial wealth of 300 dollars faces an investment opportunity. There is a 50 percent chance that an investment of X dollars could double to 2X and a 50 percent chance that her investment of X dollars would be worth O. Her Contingent Consumption utility function is u(c1, c2) = C1"c21-re where n is her subjective probability that state ci occurs because the investment is successful and (1-T) is her subjective probability that she loses her investment and state c2 occurs. Her subjective probability of success is equal to n = 28/40. How many dollars should she invest in this project? Round final answers to 2 decimals
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