Suppose That,in an Experimental Setting,100 Students Are Asked to Choose

question 67

Multiple Choice

Suppose that,in an experimental setting,100 students are asked to choose between Gamble A and Gamble B,where:
Gamble A: The student will receive $5 million with a 100 percent probability.
Gamble B: The student will receive $5 million with a 50 percent probability,$10 million with a 25 percent probability,and $0 million (nothing) with a 25 percent probability.
A risk-neutral student is

• A) likely to choose Gamble A because it has a higher expected value.
• B) likely to choose Gamble B because it has a higher expected value.
• C) likely to choose Gamble A because the student will win something (as opposed to nothing)with a higher probability.
• D) likely to choose Gamble B because the student will win something (as opposed to nothing)with a higher probability.
• E) indifferent toward both Gambles A and B because they have the same expected value.

---

Definitions:

Business's Weaknesses

Internal factors and characteristics that limit a business's ability to achieve its objectives and reduce its competitive edge.

Simple Business Plan

A straightforward, concise document outlining the core aspects of a business, including objectives, strategies, and financial forecasts.

Competitive Analysis

The process of evaluating the strengths and weaknesses of competing entities within the same industry to strategize for competitive advantage.

Business Model Canvas

A strategic management tool that allows companies to describe, design, challenge, invent, and pivot their business model.