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(Risk-averse investor) A basic assumption of economics is that investors are risk averse, meaning that when they view asset A as riskier than asset B

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(Risk-averse investor) A basic assumption of economics is that investors are risk averse, meaning that when they view asset A as riskier than asset B they will demand a higher expected return. A "fair bet" is a bet whose expected return is zero. Here's an example of a fair bet: Pay $1 to get $2 if a coin flip yields heads or to get $0 if the coin flip yields tails. Notice that this bet has expected return of zero: Expectedpayoff=Probibilyofheads0.5Payofifheads$2+Probabililyofthis0.5Payoffiftails$0=$1Expectedreturn=CostofbetExpectedpayoff1=$1$11=0% Will a risk-averse investor agree to a fair bet? Explain

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