Question
Lady Gaga has recorded a new album. Sony offers her $200million for the album rights. On the other hand, Warner Bros offers her a contract
Lady Gaga has recorded a new album. Sony offers her $200million for the album rights. On the other hand, Warner Bros offers her a contract where she gets $100million, plus an additional $200million if more than 100,000 copies of the albums are sold. Which of below is true?
A. If Lady Gaga believes that there is 60% chance she will sell more than 100,000 copies and signs with Sony, then she must be risk adverse.
B. If Lady Gaga believes that there is 40% chance that she will sell more than 100,000 copies and signs with Sony, then she must be risk adverse.
C. If Lady Gaga believes that there is 60% chance that she will sell more than 100,000 copies and signs with Warner Bros, then she must be risk loving.
D. If Lady Gaga thinks that there is 50% chance that she will sell more than 100,000 copies and signs with Warner Bros, then she must be risk loving.
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