You have just made a loss of 100, when someone offers you the following gamble. To enter into the gamble, you will first need to pay a fee of 12. Once entered, the gamble will give you a 10% chance of recovering both your 100 loss and the 12 fee, and break even. However, there is also a 90% chance that you will get nothing (which means losing your 12 entrance fee and not recovering any of the original 100 loss). Which ONE of the following statements is FALSE. O The gamble has a negative expected payoff of [0.10*(100 + 12) + 0.90*0 - 12] = -0.8 O (Tick this option if you think that none of the statements listed are false.) To analyse the problem correctly, investors should recognise that the 100 loss is a sunk cost. Without the gamble you have a 100 loss for sure. With the gamble, you face an expected loss of (100+12)*(0.90) + 0*(0.10) = 100.8