Essay
You have inherited a lottery ticket that may be a $5,000 winner. You have a 35% chance of winning the $5,000 and a 65% chance of winning $0. You have an opportunity to sell the lottery ticket for $1,500. What is your expected return and what should you do if are risk neutral?
Correct Answer:
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E(X) = $1,750. Therefore, keep...View Answer
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