Question
Fred has a utility function U = 100 + 10W 0.5 +20W 0.25 and also has an investment opportunity that will pay $0 with probability
Fred has a utility function U = 100 + 10W0.5 +20W0.25 and also has an investment opportunity that will pay $0 with probability 0.4 or $100 with probability 0.6. What is the expected payout of this opportunity?
| $60.00 | ||
| $100.00 | ||
| $197.95 | ||
| $233.12 | ||
| $263.25 |
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Investment Science
Authors: David G. Luenberger
2nd Edition
0199740089, 978-0199740086
