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Kathy’s utility function is U=W0.5, and she invests in a business that can yield $9200 with...

Kathy’s utility function is U=W0.5, and she invests in a business that can yield $9200 with probability 2/5, and $8100 with probability 3/5. Her expected wealth is

Select one:

a. $1290.

b. $4160.

c. $6360.

d. $8540.

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Answer #1

Ans: d.

Explanation:

Expected wealth:

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