! 1. George's utility function over wealth is U(W) = W1/2 and his current wealth is W = 10,000.George is considering investing his entire wealth in the stock of a pharmaceutical company (orcompanies) trying to develop a Covid-19 vaccine. (If he does not invest, he simply retains hiswealth of $10,000.)Exactly 10 companies are trying to develop a vaccine. Each company has a 0.1 probability ofsuccess and a 0.9 probability of failure. If a company succeeds in developing a vaccine, each $1invested in the company turns into $12.10. If a company fails to develop a successful vaccine,each $1 invested in the company turns into $0. It is certain that exactly one (and only one)company will succeed in developing a vaccine but it is unknown which company that will be.SunneCeorso conciders investing all $10 000 in asingle company.i. What is George'scEENndkuAa.i. What is George SeXpected------ UINThe answer is not a roundotecnuH. 150Corge wifling to inve000 m a sīgie company?b. Now suppose that George instead considers investing $1,000 apiece in each of the 10different companies.i. What is George's expected wealth in this case?ii. What is George's expected utility in this case?iii. Is George willing to invest $1,000 apiece in each of the 10 companies?

Answer:----. Date:----6/10/2021

b. Now suppose that George instead considers investing $1,000 apiece in each of the 10 different companies. i. What is George's expected wealth in this case? ii. What is George's expected utility in this case? iii. Is George willing to invest $1,000 apiece in each of the 10 companies?