Nicole Is Indifferent Between Option A, Which Gives Her $20,000

question 15

Multiple Choice

Nicole is indifferent between option A, which gives her $20,000 for sure, and option B, which gives her $10,000 with probability 0.5 or $32,000 with probability 0.5. Nicole's cost of risk for option B is

• A) zero.
• B) $1,000.
• C) $2,000.
• D) $20,000.

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Definitions:

Personality

The combination of characteristics or qualities that form an individual's distinctive character.

Judge

An official appointed to decide cases in a court of law.

Understand

The ability to grasp the meaning, significance, or nature of something, including concepts, situations, or behaviors.

Persona

An aspect of an individual's character that is presented to or perceived by others, often considered as a social facade or role that one embodies in various contexts.