Duncan Laurence, a recent winner of Eurovision Song Contest, has recorded a new album. Sony Music Entertainment has offered Duncan $200 million for rights to the album, while Warner Music Group has offered him a contract where he gets $100 million, plus an additional $200 million if the album sells more than 100,000 copies. Which of the following are true:

1. If Duncan thinks he will sell more than 100,000 copies 60% of the time and signs with Sony, then he must be risk averse.
2. If Duncan thinks he will sell more than 100,000 copies 40% of the time and signs with Sony, then he must be risk averse.
3. If Duncan thinks he will sell more than 100,000 copies 60% of the time and signs with Warner, then he must be risk loving.
4. If Duncan thinks he will sell more than 100,000 copies 50% of the time and signs with Warner, then he must be risk loving.
5. Both 1 and 4 are correct

Answer and explain