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Consider two games. One with a guaranteed payout P1 -90, and the other whose payout P2 is equally likely to be 80 or 120 .E(P . E(P2) . Var(P) . Var(P2) Which of games 1 and 2 maximizes the risk-adjusted reward E(P) - VVar(P)?

Which of games 1 and 2 maximizes the risk-adjusted reward E(P) Var(P)? 0 1 o 2

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Answer #1

0 UOn Fron qiven dda, * ConSide 7-10 gomes *One with o Suayorlad Payor o lame, *E(R uue considai ai 80+120 CR) 200 100 |ε(R): 100* Var(R): Since 욕washed -then VoC 080010000 NoCR)0400-10000 Von (P00 90-0 100-400 : 1000 ะ 180

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