An individual has his portfolio invested in such a way that its possible values are:

$70,000 with probability .25

$60,000 with probability .25

$50,000 with probability .50

The individual's expected utility function is 1 5000/w where W is wealth.

3a. What is the individual's expected wealth?

3b. What is the individual's expected utility?

3c. Suppose the individual has the opportunity to change his portfolio. The new

portfolio would be:

$85,000 with probability .25

$60,000 with probability .25

$45,000 with probability .50

Would the individual go with this? Explain.