Question
Anton is risk neutral. He could work in a company where he would get a fixed wage of 40,000. Instead, he decides to accept a
Anton is risk neutral.
He could work in a company where he would get a fixed wage of 40,000.
Instead, he decides to accept a different job offering a fixed wage of 38,000 and a bonus which depends on performance.
He knows that the bonus will be worth 3,800 with a probability of 50% and nothing with a probability of 50%.
Which statement is correct?
options:
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This story is consistent. His decision can be rational despite his attitude towards risk.
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This story is not consistent. Given that he is risk neutral, his decision is not rational. Anton is risk neutral. He could work in a company where he would get a fixed wage of 40,000. Instead, he decides to accept a different job offering a fixed wage of 38,000 and a bonus which depends on performance. He knows that the bonus will be worth 3,800 with a probability of 50% and nothing with a probability of 50%. Which statement is correct? Question 6 options:
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Financial Management For Decision Makers
Authors: Peter Atrill
8th Edition
129213433X, 978-1292134338
