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Question 8 Joe owns a painting but is unsure of its value. In particular, there four pos- sible states, and he believes that the painting's value to Joe is $2,000 with proba- bility 0.3, $1,600 with probability 0.2, $1,200 with probability 0.3, and $800 with probability 0.2. He considers selling the painting to an expert whose maximum willingness to pay is equal to $2,200, $1,800, $1,650, and $1,000, respectively in the four states. In contrast to Joe, the expert knows the value. Suppose that Joe is risk-neutral. Answer the following questions and show your work. For the yes/no part, circle the correct answer: Do prices p exist at which sales occur in all states? yes no If your answer is yes, indicate the price range (leave blank otherwise) sps Do prices p exist at which sales occur in exactly three of the states? yes If your answer is yes, indicate the price range (leave blank otherwise) sps Do prices p exist at which sales occur in exactly two of the states? yes If your answer is yes, indicate the price range (leave blank otherwise) sps no no

Question 8 Joe owns a painting but is unsure of its value. In particular, there four pos- sible states, and he believes that the painting's value to Joe is $2,000 with proba- bility 0.3, $1,600 with probability 0.2, $1,200 with probability 0.3, and $800 with probability 0.2. He considers selling the painting to an expert whose maximum willingness to pay is equal to $2,200, $1,800, $1,650, and $1,000, respectively in the four states. In contrast to Joe, the expert knows the value. Suppose that Joe is risk-neutral. Answer the following questions and show your work. For the yes/no part, circle the correct answer: Do prices p exist at which sales occur in all states? yes no If your answer is yes, indicate the price range (leave blank otherwise) sps Do prices p exist at which sales occur in exactly three of the states? yes If your answer is yes, indicate the price range (leave blank otherwise) sps Do prices p exist at which sales occur in exactly two of the states? yes If your answer is yes, indicate the price range (leave blank otherwise) sps no no

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Question 8 Joe owns a painting but is unsure of its value. In particular, there four pos- sible states, and he believes that the painting's value to Joe is $2,000 with proba- bility 0.3, $1,600 with probability 0.2, $1,200 with probability 0.3, and $800 with probability 0.2. He considers selling the painting to an expert whose maximum willingness to pay is equal to $2,200, $1,800, $1,650, and $1,000, respectively in the four states. In contrast to Joe, the expert knows the value. Suppose that Joe is risk-neutral. Answer the following questions and show your work. For the yes/no part, circle the correct answer: Do prices p exist at which sales occur in all states? yes no If your answer is yes, indicate the price range (leave blank otherwise) Do prices p exist at which sales occur in exactly three of the states? yes no If your answer is yes, indicate the price range (leave blank otherwise) Do prices p exist at which sales occur in exactly two of the states? yes no If your answer is yes, indicate the price range (leave blank otherwise)
Transcribed Image Text:Question 8 Joe owns a painting but is unsure of its value. In particular, there four pos- sible states, and he believes that the painting's value to Joe is $2,000 with proba- bility 0.3, $1,600 with probability 0.2, $1,200 with probability 0.3, and $800 with probability 0.2. He considers selling the painting to an expert whose maximum willingness to pay is equal to $2,200, $1,800, $1,650, and $1,000, respectively in the four states. In contrast to Joe, the expert knows the value. Suppose that Joe is risk-neutral. Answer the following questions and show your work. For the yes/no part, circle the correct answer: Do prices p exist at which sales occur in all states? yes no If your answer is yes, indicate the price range (leave blank otherwise) Do prices p exist at which sales occur in exactly three of the states? yes no If your answer is yes, indicate the price range (leave blank otherwise) Do prices p exist at which sales occur in exactly two of the states? yes no If your answer is yes, indicate the price range (leave blank otherwise)
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