Joe Is Risk-Neutral with Utility U = BR,where B Is

question 33

Multiple Choice

Joe is risk-neutral with utility U = bR,where b is a positive constant and R is profit from a venture.If a gamble has a 0.4 chance of R = 1 and a 0.6 chance of R = 2,Joe's expected utility E(U) is:

• A) b.
• B) 1.4b.
• C) 1.5b.
• D) 1.6b.
• E) 2b.

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