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Given the following information on lotteries (L1 and L2). Note that the probability values follow binomial probability distribution with 60% and 45% probability of success
Given the following information on lotteries (L1 and L2). Note that the probability values follow binomial probability distribution with 60% and 45% probability of success for L1 and L2 respectively.
State-contingent asset payoffs
| State | 1 | 2 | 3 |
| Probability | P(x=0)=? | P(x=1)=? | P(x=2)=? |
| L1 (payoff) | 200 | 1500 | 3700 |
| L2 (payoff) | 900 | 1350 | 1850 |
Calculate the probability for each state
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