Suppose you won the lottery and had two options: (1) receiving $0.4 million or (2) taking a gamble in which, at the flip of a coin, you receive $0.8 million if a head comes up but receive zero if a tail comes up. What is the expected value of the gamble? Enter your answer in millions. For example, an answer of $500,000 should be entered as 0.5. Round your answer to one decimal place. $ million Would you take the sure $0.4 million or the gamble? -Select- If you chose the sure $0.4 million, would that indicate that you are a risk averter or a risk seeker? -Select- Suppose the payoff was actually $0.4 millionthat was the only choice. You now face the choice of investing it in a U.S. Treasury bond that will return $424,000 at the end of a year or a common stock that has a 50-50 chance of being worthless or worth $920,000 at the end of the year. The expected profit on the T-bond investment is $24,000. What is the expected dollar profit on the stock investment? Round your answer to the nearest dollar. $ The expected rate of return on the T-bond investment is 6%. What is the expected rate of return on the stock investment? Round your answer to the nearest whole number. % Would you invest in the bond or stock? -Select- Exactly how large would the expected profit (or the expected rate of return) have to be on the stock investment to make you invest in the stock, given the 6% return on the bond? Round your answer to the nearest whole number. If no exact answer can be obtained, enter 0. % How might your decision be affected if, rather than buying one stock for $0.4 million, you could construct a portfolio consisting of 100 stocks with $4,000 invested in each? Each of these stocks has the same return characteristics as the one stockthat is, a 50-50 chance of being worth zero or $9,200 at year-end. Investing in a portfolio of stocks would definitely be a deterioration over investing in the single stock. Investing in a portfolio of stocks would definitely be an improvement over investing in the single stock. The situation would be unchanged. -Select- Would the correlation between returns on these stocks matter? -Select