Every $1 Invested in Safe Sox Will Yield $2 for Sure.Each

question 12

Multiple Choice

Every $1 invested in Safe Sox will yield $2 for sure.Each $1 invested in Wobbly Umbrellas will yield $8 with probability 1/2 and $0 with probability 1/2.An investor has $10,000 to invest in these two companies and her von Neumann-Morgenstern utility function is the expected value of the natural logarithm of the total yield on her investments.If S is the amount of money that she invests in Safe Sox and $10,000 2 S is the amount that she invests in Wobbly Umbrellas, what should S be to maximize her expected utility? (Pick the closest answer.)

• A)$1,111
• B)$3,333
• C)$5,000
• D)$6,667
• E)$9,111

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Definitions:

Industries

Sectors or categories of business activity focused on the production or delivery of goods and services.

Employer-Provided

Services or benefits offered to employees directly by their employer, such as health insurance, retirement plans, or transportation allowances.

Less Cost

Refers to a reduction in expenses or costs incurred by an organization or individual.

Direct Pay

Wages or salaries that employees receive directly from their employer as compensation for their labor.