Problem

Consider the following three tickets: ticket A pays $10 if ______ is elected as president,...

Consider the following three tickets: ticket A pays $10 if ______ is elected as president, ticket β pays $10 if ______ is elected, and ticket C pays $10 if neither is elected. (Fill in the blanks yourself.) Could the three tickets sell for less than the present value of $10? Could they sell for more? Try auctioning off the tickets. What are the implications for MM’s proposition 1?

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Solutions For Problems in Chapter 17