Harvery is faced with a lottery where he has a 25 percent chance of winning $10, a 25 percent chance of winning $30, and a 50 percent chance of losing $30.
a. What is the expected value of the lottery?
b. Will Harvey accept the lottery if he is risk neutral? (Possible answers: yes, no, indifferent, ambiguous)
c. Will Harvey accept the lottery if he is risk averse? (Possible answers: yes, no, indifferent, ambiguous)
d. Will Harvey accept the lottery if he is risk seeking? (Possible answers: yes, no, indifferent, ambiguous)