A “risk-neutral” person is one who will pay exactly the expected value for any bet. Thus, a risk-neutral person would pay you $1 (nothing more and nothing less) for a bet where you pay $2 if heads comes up on a fair coin and nothing if tails comes up. Assume that Ted is risk-neutral. Ted is offered the following proposition/bet. I am going to flip a fair coin until a tails comes up. Let N be the number of times that heads comes up (before the first tail). I will pay Ted 2N dollars. For example, if tails comes up first, Ted will get one dollar, but if four heads come up before the first tails then Ted gets 24 or $16. How much will Ted pay for the bet? (Hint: Simply use the E(R) formula.)