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3. Which lottery payout scheme is better? Suppose you win a raffle held at a neighborhood elementary school fundraiser and are given the choice between two different ways to be paid. You can either accept the money in a lump sum immediately or in a series of payments over time. If you choose the lump sum payout, you receive $3,100 today. If you choose to collect payments over time, you receive three payments: $1,000 today, $1,000 1 year from today, and $1,000 2 years from today. At an interest rate of 7% per year, the winner would be better off accepting the value. At an interest rate of 9% per year, the winner would be better off accepting I O The lump sum is always better. The payments over time are always better. O It will depend on the interest rate; advise her to get a calculator. None of these answers is good advice. since that choice has the greater present since it has the greater present value. A couple years after you win the raffle, you and your friend are back at the same…

3. Which lottery payout scheme is better? Suppose you win a raffle held at a neighborhood elementary school fundraiser and are given the choice between two different ways to be paid. You can either accept the money in a lump sum immediately or in a series of payments over time. If you choose the lump sum payout, you receive $3,100 today. If you choose to collect payments over time, you receive three payments: $1,000 today, $1,000 1 year from today, and $1,000 2 years from today. At an interest rate of 7% per year, the winner would be better off accepting the value. At an interest rate of 9% per year, the winner would be better off accepting since that choice has the greater present O The lump sum is always better. O The payments over time are always better. O It will depend on the interest rate; advise her to get a calculator. O None of these answers is good advice. , since it has the greater present value. A couple years after you win the raffle, you and your friend are back at the…

10. Which lottery payout scheme is better? Suppose you win a small lottery and have the choice of two ways to be paid: You can accept the money in a lump sum or in a series of payments over time. If you pick the lump sum payout, you get $3,000 today. If you pick the payments over time payout, you get three payments: $1,000 today, $1,000 one year from today, and $1,000 two years from today. At an interest rate of 6% per year, you would be better off accepting the At an interest rate of 8% per year, you would be better off accepting the It will depend on the interest rate; advise her to get a calculator. lump sum The lump sum payout is always better. The payments over time payout is always better. None of these answers is good advice. payout since it has the greater present value. payments over time Years after you win the lottery, a friend in another country calls to ask your auvice. Dy wild comcidence, she has just won another lottery with the same payout schemes. She must make a quick…

3. Which lottery payout scheme is better? Suppose you win a raffle held at a minor league baseball game and are given the choice between two different ways to be paid. You can either accept the money in a lump sum immediately or in a series of payments over time. If you choose the lump sum payout, you receive $3,000 today. If you choose to collect payments over time, you receive three payments: $1,000 today, $1,000 1 year from today, and $1,000 2 years from today. At an interest rate of 6% per year, the winner would be better off accepting the value. , since that choice has the greater present O The lump sum is always better. The payments over time are always better. O It will depend on the interest rate; advise her to get a calculator. O None of these answers is good advice. At an interest rate of 10% per year, the winner would be better off accepting A couple years after you win the raffle, you and your friend are back at the same event. This time, your friend gets lucky and wins the…

Situation 1 Suppose you have won $1000 on a game show. In addition to these winnings, youare now asked to choose between Option A: 50% chance of winning $1000 and 50% chance of winning nothing Option B: winning $500 for sure. Situation 2 Suppose you have won $2000 on a game show. In addition to these winnings, youare noW asked to choose between Option C: 50% chance of losing $1000 and 50% chance of losing nothing Option D: losing $500 for sure. They found that respondents are much more likely to choose Option B in the first case and Option C in the second case. Suppose the respondents are not indifferent between options. Show that their choices are inconsistent with the Expected Utility Theory.

QUESTION 8 S1, S2, S3 and S4 are UIUC students who just graduated. They each have a poster of Dolly Parton that they are willing to sell. B1, 82, B3 and B4 are new students at UIUC and want to buy Dolly Parton postern for their rooms. The tables below give the minimum selling prices and maximum buying prices for each student. Minimum Selling Prices Maximum Buying Pricen X+$9 S1 $10 B1 S2 $11 B2 X+$14 S3 $20 B3 X+$16 S4 $25 B4 X+$26 If X is negative $5 (.e., Xu-$5), what is the market-clearing price? Note: Do not include the dollar sign,

In these neighborhoods, Sale price of Comparable 1,2,3 are worth about $1,250,000; $1,800,000 and $1,500,000 respectively. Two sold within the last four months, while the third sold six months ago - Comparable 1: The buyer can pay in 2 installments. The first installment will be paid 50% total amount of the sale price now, and the second installment will be paid 50% total amount of the sale price after one year.- Comparable 2: The buyer can pay in 2 installments. The first installment will be paid 30% total amount of the sale price next year, and the second installment will be paid 70% total amount of the sale price after two years.- Comparable 3: The buyer can pay in four equal installments for the next four years.What is Present Value of 3 comparable? show your work

A state lottery is currently offering a Power Ball payoff of $20 million, which it will pay to the lucky winner in 20 annual $1 million installments. Is this really a $20 million prize? How would you decide its actual value? Please show formula.

11)Eva is saving money for a vacation she wants to take five years from now. If the trip will cost $1,000 and she puts her money into a savings account paying 3 percent interest, compounded annually, how much would Eva need to deposit today to reach her goal without making further deposits?       Group of answer choices $961.54 $932.75 $862.61 $821.93

43. On June 1, you win $1 million in a lottery and imme- diately acquire numerous "friends," one of whom offers you the deal of a lifetime. In return for the million, she'll pay you a cent today, two cents tomorrow, four cents the next day, eight cents the next, and so on, stopping with the last payment on June 21. (a) Assuming you take this deal, how much money will you receive on June 21? (b) Should you take the deal? Explain. (c) Would you take the deal if payments continued for the entire month of June?

True or False Alexis makes an oral promise to Roberto that she will prepare a 4-course meal for twenty people, for $800 total, and bring it over to Roberto’s house at 5 pm Saturday October 17, 2020, just before Roberto’s party (it begins at 6 pm). Roberto orally promises to pay Alexis $400 on Thursday, October 15, and the balance of $400 one week later - on Thursday, October 22. These oral promises are binding on both sides as a contract.

b) Jay is holding some Tesla shares (NASDAQ: TSLA) and The TSLA stocks are currently trading at $985 on the Nasdaq. Given TSLA stocks are very volatile, Jaleel wishes to protect the value of his investments. He seeks your advice on using option contracts and presents a list of options for you to choose from. Assume the number of underlying shares per contract is 100 shares. Strike $975 $980 $985 $1005 (i) (ii) Call premium Moneyness $10.01 $4.45 $0.63 $0.05 Put premium Moneyness $0.01 $0.04 $0.99 $20.48 Please specify the moneyness of the above options. Are they in the money, at the money, or out of the money? Explain the type of risk that Jay is facing and which option is your suggestion to control his risk, provide your reason and explain it.

4 In a gambling game, Player A and Player B both have a $5 and a $10 bill. Each player selects one of the bills without the other player knowing the bill selected. Simultaneously they both reveal the bills selected. If the bills do not match, Player A wins Player B's bill. If the bills match, Player B wins Player A's bill. (a) Develop the game theory table for this game. The values should be expressed as the gains (or losses) for Player A. Player B Player A $5 $10 $5 (b) Is there a pure strategy? Why or why not? ---Select--- . Since the maximum of the row minimums is --Select--- (c) Determine the optimal strategies and the value of this game. probability Player A selects $5 probability Player A selects $10 probability Player B selects $5 probability Player B selects $10 = = $10 = = Does the game favor one player over the other? Yes O No and the minimum of the column maximums is (d) Suppose Player B decides to deviate from the optimal strategy and begins playing each bill 50% of the…

3. A decision maker is faced with a choice between a lottery with a 30% chance of a payoff of $30 and a 70% chance of a payoff of $80, and a guaranteed payoff of $65. a. If the decision makers utility function is U = 1/2 what is the risk premium associated with this choice? b. If the decision makers utility function is U = | + 500, what is the risk premium associated with this choice? Please make sure you answers/hand writing are clear and easy to read %3D

Person A thinks that a lottery that gives $100 with a probability of 0.5 and $0 with a chance of 0.5 is better than a lottery that gives $500 with a probability of 0.1 and $0 with a chance of 0.9. The certainty equivalence of any lottery is smaller than its expected value? True/ False, and why?

You are a hotel manager and you are considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the accompanying table. Recession (50%) -$ 10 $ 20 -$ 30 $ 50 Boom (50%) $ 20 Project A B -$ 10 $ 30 $ 50 If a manager adopted both projects A and B simultaneously, the varlance in returns assoclated with this joint project would be Multiple Choice 0. 10. 30. 50.

ABC Company negotiates a 1% credit card discount.  If a customer charges $1,000 on his VISA credit card, how much money will ABC receive?   ABC Company negotiates a 1% credit card discount.  If a customer charges $1,000 on his VISA credit card, how much money will ABC receive? Group of answer choices $900 $1,000 $10 $990

(9) Solve the following three-stage game through backwards induction. 1 L R 2 L R L R L/ 1\R L/ 1\R L/1\R L/1\R 1,0 -1,3 0,1 -1,0 1,2 2, 1 0,1 -3,4

4 A recently discovered painting by Picasso is on auction at Sotheby's. There are two main bidders Amy and Ben {1,2}. Bidding starts at £10M but the value of the painting is certainly not more than £20M. Each bidder's valuation v; is independently and uni- formly distributed on the interval [10M, 20M], and this is common knowledge among the players: A bidder knows their own valuation but not of their opponent. Consider an auction where an object is allocated to the highest bidder but the price paid by the bidder is determined randomly. With probability 3/4, the bidder pays their own bid, and with probability 1/4 the bidder pays the losing bid. The person bidding lowest pays nothing. If the bids are equal, each bidder gets the object with probability one-half, and in this case, pays their bid. Suppose that bidder 1 assumes that bidder 2 will bid a constant fraction, Y, of bidder 2's valuation (and similarly, bidder 2 assumes bidder 1 will bid the same constant propor- tional value y of…

4 A recently discovered painting by Picasso is on auction at Sotheby's. There are two main bidders Amy and Ben {1,2}. Bidding starts at £10M but the value of the painting is certainly not more than £20M. Each bidder's valuation v; is independently and uni- formly distributed on the interval [10M, 20M], and this is common knowledge among the players: A bidder knows their own valuation but not of their opponent. Consider an auction where an object is allocated to the highest bidder but the price paid by the bidder is determined randomly. With probability 3/4, the bidder pays their own bid, and with probability 1/4 the bidder pays the losing bid. The person bidding lowest pays nothing. If the bids are equal, each bidder gets the object with probability one-half, and in this case, pays their bid. Suppose that bidder 1 assumes that bidder 2 will bid a constant fraction, 7, of bidder 2's valuation (and similarly, bidder 2 assumes bidder 1 will bid the same constant propor- tional value y of…

-bid U2. Suppose that three risk-neutral bidders are interested in purchasing a Princess Beanie Baby. The bidders (numbered 1 through 3) have valua- tions of $12, $14, and $16, respectively. The bidders will compete in auc- tions as described in parts (a) through (d); in each case, bids can be made in $1 increments at any value from $5 to $25. (a) Which bidder wins an open-outcry English auction? What are the final price paid and the profit to the winning bidder? (b) Which bidder wins a second-price, sealed-bid auction? What are the final price paid and the profit to the winning bidder? Contrast your answer here with that for part (a). What is the cause of the difference in profits in these two cases? 190 HO (c) In a sealed-bid, first-price auction, all the bidders will bid a positive amount (at least $1) less than their true valuations. What is the likely outcome in this auction? Contrast your answer with those for parts (a) and (b). Does the seller of the Princess Beanie Baby have…

Please correct answer and don't use hand rating

which is the write option?

Which one of the following descriptions is correct according to this extensive form? (I think it's 3rd option but unsure)

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I need number 5, number 4 is shown as it is needed for background info for 5

If a risk-neutral individual owns a home worth $200,000 and there is a three percent chance the home will be destroyed by fire in the next year, then we know 15. that: a) He is willing to pay much more than $6,000 for full cover. b) He is willing to pay much less than $6,000 for full cover. c) He is willing to pay at most $6,000 for full cover. d) None of the above are correct. e) All of the above are correct.

You play a game by drawing a card from a standard deck then replacing the drawn card. If you draw a king or a queen, you win Php 500. If you draw an ace, you win Php 800. However, you lose Php 650 for anything else. • If you continue to play the game, how much do you expect to win or lose in the game? • Is this a fair game? Why or why not?

Hello, please help me to solve part (d) and (e):Charlie finds two fifty-pence pieces on the floor. His friend Dylan is standing next to him when he finds them. Chris can offer Dylan nothing at all, one of the fifty-pence pieces, or both. Dylan observes the offer made by Charlie, and can either accept the offer (in which case they each receive the split specified by Charlie) or reject the offer.If he rejects the offer, each player gets nothing at all (because Charlie is embarassed and throws the moneyaway).(a) Formulate this interaction as an extensive-form game. To keep things simple, players’ payoff is equal to their monetary gain.(b) List all histories of the game. Split these into terminal and non-terminal histories.(c) What are the strategies available to Charlie? What are the strategies available to Dylan? Draw the strategic-form game.(d) Find the pure-strategy Nash equilibria of this game.(e) What do you think will happen?

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QUESTION 1 Mixtastic's Founder-CEO is discussing the timing of the launch of its mix-at-home cocktail kit with potential investors. "With a big push and a full-time commitment from myself, we could roll out the subscriptions right away and make $100K in profit per year. Or, if I run the business part-time as a side project, we could start selling three years from now." Assuming Mixtastic has an 80% chance of survival each year, how much would it be worth to start earning profit immediately, rather than in three years? It's worth $80K more if it launches immediately. It's worth $244K more if it launches immediately. It's worth $376K more if it launches immediately. It's worth $1 million more if it launches immediately.