3 Fernanda and Tigstu have the following total utility from differentlevels of income. Assume each currently has $20,000.IncomeTU (Fernanda)TU (Tigstu)$10,000$15,000$20,000$25,000$30,00030304544605775699080Fernanda is risk-Tigstu is risk-If offered actuarially unfair insurance, Fernandabuy it;Tigstu(might / will / will not) buy it.If Fernanda faces a loss of $10,000 with 25% probability (Loss A) or aloss of $5,000 with 50% probability (Loss B) :Risk premium (Loss A)Risk premi um (Loss B).( >, <, = )If you were an investment broker for Fernanda and Tigstu, what wouldyou advise them to do about the following two investments:A) DeVries Oil Exploration: 20% chance of 50% return; 80% chance of 08return.B) Dolma Bond Fund: 60% chance of 6% return; 40% chance of 12% return.a) Tell both of them to buy Devries.b) Tell both of them to buy Dolma Bond.Tell Tigstu to buy Devries; tell Fernanda to buy Dolma.d) Tell Tigstu to buy Dolma; tell Fernanda to buy Devries.c)

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an investment broker for Fernanda and Tigstu, what would If you were you advise them to do about the following two investments: A) DeVries Oil Exploration: 20% chance of 50% return; 80% chance of 08 return. B) Dolma Bond Fund: 60% chance of 6% return; 40% chance of 12% return. a) Tell both off them t o buy Devries.

an investment broker for Fernanda and Tigstu, what would If you were you advise them to do about the following two investments: A) DeVries Oil Exploration: 20% chance of 50% return; 80% chance of 08 return. B) Dolma Bond Fund: 60% chance of 6% return; 40% chance of 12% return. a) Tell both off them t o buy Devries.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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