Lottery A refers to a lottery ticket that pays $2,000 with probability 0.2, $4,000with probability 0.3, $6,000 with probability 0.3, and $8,000 with probability 0.2. If Jay paid $4,001 for Lottery A, what can we conclude about his risk attitude? A. He is risk seeking B. he is risk neutral C. He is risk averse D. there is too little information to answer this question

Lottery A refers to a lottery ticket that pays $2,000 with probability 0.2, $4,000with probability 0.3, $6,000 with probability 0.3, and $8,000 with probability 0.2. If Jay paid $4,001 for Lottery A, what can we conclude about his risk attitude? A. He is risk seeking B. he is risk neutral C. He is risk averse D. there is too little information to answer this question

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: The Basic Tools Of Finance

Section: Chapter Questions

Problem 9PA

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Question 13 Rhodri has a lottery ticket which will pay £80 with probability 0.5 and zero otherwise. He is willing to exchange the lottery ticket for a certain £25. What is the risk premium of the lottery ticket for Rhodri? Round your answer to 2 decimal places. Add your answer
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