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probability 1-p. (a) Should imvest ifp - 0.57 (D) What is the minimum value of phat would nduce me to imvest? Pease round your answer to tao decimal piaces. (E) Now suppose mat i have pover utity with a>l. W your ansuer to (b) increase or decrease? Increase Decrease hs probiem Cannot Be Determined

probability 1-p. (a) Should imvest ifp - 0.57 (D) What is the minimum value of phat would nduce me to imvest? Pease round your answer to tao decimal piaces. (E) Now suppose mat i have pover utity with a>l. W your ansuer to (b) increase or decrease? Increase Decrease hs probiem Cannot Be Determined

Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter10: Sequences, Series, And Probability
Section10.2: Arithmetic Sequences
Problem 68E
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Suppose that your current weath is $5000 and you have iogarithmic ubility. You are offered an investment that costs $1250 today. The investment will either pay off $2500 with probability p. or nothing with probablity 1-p (a) Should I invest itp- 0.57 (b) What is the minimum value of p that would induce me to invest? Piease round your answer to two decimal places. (C) Now suppose that i have power utily with a>1. wil your answer to (b) increase or decrease? Increase Note Decrease his probiem Cannot Be Determined Answers
Transcribed Image Text:Suppose that your current weath is $5000 and you have iogarithmic ubility. You are offered an investment that costs $1250 today. The investment will either pay off $2500 with probability p. or nothing with probablity 1-p (a) Should I invest itp- 0.57 (b) What is the minimum value of p that would induce me to invest? Piease round your answer to two decimal places. (C) Now suppose that i have power utily with a>1. wil your answer to (b) increase or decrease? Increase Note Decrease his probiem Cannot Be Determined Answers
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