Suppose you have just inherited $$15,000$ and are considering options for investing the money to maximize your return.

that event and then add them up$.)$

A$.$ Put the money in an interest$-$bearing chequing account that earns $3\%.$ The CDIC insures the account against bank failure.

B$.$ Invest the money in a corporate bond with a stated return of $5\%$ although there is an $11\%$ chance the company could go bankrupt.

D$.$ Hold the money in cash and earn zero return.

without repaying you. The second option is to hold the money in cash and earn zero return.

If you could pay your friend $$150$ to find out extra information about Mike that would indicate with certainty whether he will leave town without paying, you $($would$/$would not$)$

pay the $$150.$ Assuming that you always choose the best option based on the information available to you, your

expected return if you pay your friend $($accounting for the cost of paying your friend$)$ is $ which is $($less than$/$greaterthan$/$equal to$)$

your expected return if you do not pay your friend. $($Round your response to the nearest cent.$)$

What does this say about the value of better information regarding risk?

A$.$ Paying a small amount to get better information regarding risk doesn't bring benefits.

B$.$ A problem created by asymmetric information can't be solved with money.

C$.$ Paying a small amount to improve risk assessment can be very beneficial.

D$.$ Paying a small amount of money is inefficient in cases of moral hazard.