Eunice, the industry analyst of H&M, wants to determine the propensity of Major Clothing companies toward risk. She was able to determine the utility distribution of H&M, Uniqlo and Dickies. For H&M, If the expected payoff of a venture is a loss of 125,000, the utility value is 0.00, if a loss of 75,000, the utility value is .2, if breakeven, the utility value is .5, if gain of 75,000 .8 and if gain of 125,000 utility value is 1. For Uniqlo, if loss of 125,000 utility value is 0, if loss of 75,000 utility value is .1, breakeven is .4, if a gain of 75,000, utility value is .7 and if gain of 125,000 utility value is 1. For Dickies, if loss of 125,000, utility value is 0, if loss of 75,000, utility value is .3 breakeven is .6, if gain of 75,000, utility value is .9 and gain of 125,000, utility value is 1. What is the propensity to risk of the three internet companies? Explain your graph.
Eunice, the industry analyst of H&M, wants to determine the propensity of Major Clothing
companies toward risk. She was able to determine the utility distribution of H&M, Uniqlo
and Dickies. For H&M, If the expected payoff of a venture is a loss of 125,000, the utility
value is 0.00, if a loss of 75,000, the utility value is .2, if breakeven, the utility value is .5,
if gain of 75,000 .8 and if gain of 125,000 utility value is 1. For Uniqlo, if loss of 125,000
utility value is 0, if loss of 75,000 utility value is .1, breakeven is .4, if a gain of 75,000,
utility value is .7 and if gain of 125,000 utility value is 1. For Dickies, if loss of 125,000,
utility value is 0, if loss of 75,000, utility value is .3 breakeven is .6, if gain of 75,000, utility
value is .9 and gain of 125,000, utility value is 1. What is the propensity to risk of the three
internet companies? Explain your graph.
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