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Unformatted text preview: 3. Suppose that you have a certain amount of money that you’d like to invest. You’re considering putting your money in one of two companies: Riskorama Inc , or Dull ‘n Steady Industries . If you invest in Riskorama , there’s a 20% probability that you’ll make $100,000 in profit, and an 80% probability that you’ll lose everything. If you invest in Dull ‘n Steady , you’ll make a certain profit of $15,000. a. What is the expected profit from investing in: Riskorama : Dull ‘n Steady : b. A friend of yours had a similar investment option, and she decided to invest in Dull ‘n Steady . What does this say about her preference for risk? Explain. 4. Consider the current bargaining going on between Israel and the Palestinians. Is the information in this strategic arena symmetric or asymmetric ? Explain....
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This test prep was uploaded on 04/22/2008 for the course ECON 242 taught by Professor Nonnenmacher during the Spring '06 term at Allegheny.
- Spring '06