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Dr. Li has square-root utility over final wealth in millions of dollars; that is, U(W_final) = (W_final)^(1/2) where W_final is stated in millions of dollars.
Dr. Li has square-root utility over final wealth in millions of dollars; that is, U(W_final) = (W_final)^(1/2) where W_final is stated in millions of dollars. Dr. Li has an initial wealth of $5mn. Dr. Li can invest $1mn in a venture that will yield $0.5mn with a probability of 60% and $3mn with a probability of 40%. Ignore the time value of money. What is Dr. Li's expected utility of final wealth if the venture is undertaken? 2190.6562 -4.9008 2231.1544 O 2.3311
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