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You consider investing 800 in stocks of the company X for a certain period. There is a possibility for X to merge with Y, in
You consider investing 800 in stocks of the company X for a certain period. There is a possibility for X to merge with Y, in which case you expect your investment to appreciate 300, otherwise you expect it to depreciate 200. Also, rather than investing, you can choose to keep your 800. By using a utility function U(x)=x, and by defining p the probability that X merges with Y, what is the condition that p must satisfy for your investment to be worthwhile (rounded to two decimal places)? a. p>0.50 b. p>0.42 c. p>0.48 d. Another answer e. p>0.46 f. p>0.44
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