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Nicole Is Indifferent Between Option A, Which Gives Her $20,000

Question 15

Multiple Choice

Nicole is indifferent between option A, which gives her $20,000 for sure, and option B, which gives her $10,000 with probability 0.5 or $32,000 with probability 0.5. Nicole's cost of risk for option B is


A) zero.
B) $1,000.
C) $2,000.
D) $20,000.

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