Wmcp test 2 exam - Study guides, Class notes & Summaries

WMCPTest2Examwith100%CorrectSolutions. Investors need to be rewarded if they buy an investment with a risky payout because investors in general are a) risk neutral. b) risk seeking. c) risk averse. d) risk tolerant. - Correct Answer risk averse. How much would a client pay for a risky investment with a 50% probability of being worth $500 and 50% of being worth $1,000 assuming a natural log utility function? a) $750.00 b) $707.11 c) $756.27 d) $794.32 - Correct Answer $707.11