What is the expected value of the game

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1. You play a game where if the flip of a fair coin results in heads, you get $10,000; and nothing if it comes up tails. Answer each of the following questions:

a. What is the expected value of the game?

b. You're offered $5,400 to not play the game. If you're risk neutral (A=0) do you take the $5,400 or do you play the game? Why?

c. If you're risk averse, what is the most amount (specify amount using either <, >, =) you would need to be paid to walk away from the game?

d. If you're risk seeking, what is the least amount (specify $ amount using either <, >, =) you would need to be paid to walk away from the game?

e. If you're risk neutral, what is the amount (specify $ amount using either <, >, =) you would need to be paid to walk away from the game?

Reference no: EM131862107

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