Assume Janet Is Risk-Averse

question 18

Multiple Choice

Assume Janet is risk-averse. Which of the following bets is she more likely to accept, depending on the degree of risk aversion?

• A) Win $40, ¼ of the times; win $10, ½ of the times; and lose $40, ¼ of the times.
• B) Win $40, ¼ of the times; break even ½ of the times; and lose $40 ¼ of the times.
• C) Win $20, ¼ of the times; win $10, ½ of the times; and lose $20, ¼ of the times.
• D) Win $20, ¼ of the times; win $10, ¼ of the times; and lose $20, ¼ of the times.

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