Kedran Is Indifferent Between Option A, Which Gives Her $10,000

question 75

Multiple Choice

Kedran is indifferent between option A, which gives her $10,000 for sure, and option B, which gives her $5,000 with probability 0.4 or $15,000 with probability 0.6. Kedran's cost of risk for option B is

• A) zero.
• B) $1,000.
• C) $5,000.
• D) $10,000.

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Definitions:

Lens

An optical device made of transparent material that affects the focusing of light rays to form images.

Rods

Light-sensing nerve cells in the eye, at the posterior of the retina, that function in dim light but do not provide sharp images or detect color.

Cones

Light-sensing nerve cells in the eye, at the posterior of the retina, that are sensitive to color, provide sharp images, and function only in bright light.

Retinas

The light-sensitive layer of tissue at the back of the inner eye, essential for converting light into neural signals for vision.