What is your expected wealth with each investment

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Reference no: EM13833483

You have $1,000, which you can invest in a risk-free investment, earning 2% with certainty. Alternatively, you can invest in a project that has a 30% chance of losing $500, and a 70% chance of gaining $400.

(a) What is your expected wealth with each investment?

(b) What is your risk premium with each investment?

Reference no: EM13833483

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