Investment

David has an investment opportunity that pays 33 with probability 1/2 and loses 30 with probability 1/2. a) If

his current wealth is 111 and his utility function is U = W1/2, will he make this investment? b) Will he make

the investment if he has a partner who will share equally in the net return (positive and negative) from the

investment?

This question has been answered.

Get Answer