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-Assume the Information in the Table Regarding the Probability and

Question 18

Multiple Choice

 Investment  A  B  State description  Bad state  Good state  Bad state  Good state  Probability 0.250.750.250.75 Payoff 200220400435\begin{array}{|l|l|l|l|l|}\hline \text { Investment } & \text { A } && \text { B } \\\hline \text { State description } & \text { Bad state } & \text { Good state } & \text { Bad state } & \text { Good state } \\\hline \text { Probability } & 0.25 & 0.75 & 0.25 & 0.75 \\\hline \text { Payoff } & 200 & 220 & 400 & 435 \\\hline\end{array}
-Assume the information in the table regarding the probability and payoffs of assets A and B relates to an investor who has a log utility function.By how much will the utility of asset B exceed that of asset A for this investor?


A) 0.712 -0.712
B) 0.687 -0.687
C) 0.684 0.684
D) 0.712 0.712

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