As the Winning Contestant in a Television Game Show, You

question 7

Multiple Choice

As the winning contestant in a television game show, you are considering the prizes to be awarded.You must indicate to the sponsor which of the following two choices you prefer, assuming you want to maximise your wealth.Assume it is now January 1, and there is no danger whatever that the sponsor won't pay off. Which one would you choose?

• A) Choice 1
• B) Choice 2
• C) Choice 1, if the payments were made at the end of the year.
• D) The choice would depend on how soon you need the money.
• E) Either one, since they have the same present value.

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Definitions:

Hostile Takeover

An acquisition attempt by a company or individual despite resistance or opposition from the target company's management.