Jones has a utility function u = m0.5. His initial wealth is mo 1000. He is considering Mr. to invest some amount q ≤ mo in a risky project with the return g = 0.2 in a good state and -0.5 in a bad state. The probability of the good state is pg = 0.8 and the probability of the bad state is p = 0.2. a return of a) What is the expected value of this investment? b) What is the expected utility of this investment?

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