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Suppose you won the Belize Lottery and were offered (1) ns million dollan or (2) a eamble which you would get $1 million if a
Suppose you won the Belize Lottery and were offered (1) ns million dollan or (2) a eamble which you would get $1 million if a head were flipped but zero if a bail came up. a. What is the expected value of the Gamble? ( 3 points) b. Would you take the sure 0.5 million dollars or gamble? Briefly explain your answer. (4 points) c. If you choose the sure 0.5 miltion dollars, are you a risk averter of a risk seeker? (4 Points) Suppose you take the sure $0.5, You can invest it in either a U.S Treasury Bond that will return $537,$00 at the end of a year or 4 common stock that has a 50/50 chance of being either worthless or worth $1,150,000 at the end of the year. d. What is the expected dollar profit on the stock investment? ( 4 points)
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