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Hello, this is an expected income function question that are both relevant with each other. Thank you! In Questions 4-5, We will look at Warda's
Hello, this is an expected income function question that are both relevant with each other. Thank you!
In Questions 4-5, We will look at Warda's (less risky) Watermelon Farm. Warda needs a loan of $300 in order to grow watermelons. Oso offers to lend her money. If Good Rain, which occurs with a probability of 0.75, farm revenues are $2000; If Drought, which occurs with a probability of 0.25, farm revenues are $500. What is Warda's expected income function under assuming a Full Liability loan contract? Simplify your answer to the form E(y) = A-B*i A = B = Question 5 2 pts Instead of loaning $300 to Warda, Oso could put the $300 in a savings account that pays an interest rate of 0.05 (i.e., 5%) and thus has $315 at the end of the year. What is the expected profit function under full liability? Simplify your answer to the form () = A+Bi A = B =
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