Consider the following two investments.

Q1. ) Which is preferred if the utility function is U(W) = -W-0.04W^2?

Investment A

Outcome $7 probability 0.4

Outcome $10 Probability 0.2

Outcome $14 Probability 0.4

Investment B

Outcome $5 probability 0.5

Outcome $12 Probability 0.25

Outcome $20 Probability 0.25

Q2. Consider again the above data (Investment A and Investment B). The probability of a $5 payoff is 0.5 and a $12 pay off is 0.25.

How much would these probabilities have to change so that the investor is indifferent between investment A and investment B?