Risk averter-risk lover or risk neutral

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Reference no: EM131009744

The CEO of a publishing company says she is indifferent between the certainty of receiving $7,500 and a gamble where there is 0.5 chance of receiving $5,000 and a 0.5 chance of reveiving $10,000. Also, she says she is indifferent between the certainty of reveiving $10,000 and a gamble where there is a 0.5 chance of receiving $7,500 and a 0.5 chance of receiving $12,500.

a) Draw four points on the utility function of this publishing executive.

b) Does she seem to be a risk averter, a risk lover, or risk neutral?

Reference no: EM131009744

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