A risk-averse manager is considering a project that will cost £100. There is a 10 percent chance the project will generate revenues of £100, an 80 percent chance it will yield revenues of £50, and a 10 percent chance it will yield revenues of £500. Should the manager adopt the project? Explain. What will a risk-neutral and risk-loving manager do in the same situation?

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A:

Q: The expected value of project Red is

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A: Answer is given below

Q: Describe the difference between risk and uncertainty. Which one is more preferable and why?

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