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8 July, 13:40

Is a risk neutral person likely to make a fair bet? A. No. Risk neutral individuals are indifferent about making a fair bet. B. Yes. Risk neutral individuals are unwilling to make a fair bet. C. No. Risk neutral individuals are willing to make a fair bet. D. Yes. Risk neutral individuals are indecisive about making a fair bet.

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  1. 8 July, 14:02
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    Answer: A. No. Risk neutral individuals are indifferent about making a fair bet.

    Explanation: A fair bet is given as a wager with an expected value (the sum of the probability of a payoff times the value of the payoff) of zero. A risk neutral individual is one who is indifferent about making a fair bet thus, such person has a constant marginal utility (the extra pleasure from each extra dollar of wealth) of wealth.
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Home » Business » Is a risk neutral person likely to make a fair bet? A. No. Risk neutral individuals are indifferent about making a fair bet. B. Yes. Risk neutral individuals are unwilling to make a fair bet. C. No.
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