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Consider a lottery with three possible outcomes: $100 will be received with probability 0.1, $50 with probability 0.2, and $10 with probability 0.7. (a) What

Consider a lottery with three possible outcomes: $100 will be received with probability 0.1, $50 with

probability 0.2, and $10 with probability 0.7.

(a) What is the expected value of the lottery?

(b) What is the variance of the outcomes of the lottery?

(c) What is the maximum price that a risk-averse person would pay to play the lottery

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