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Business, 31.03.2020 03:06 james2811

Alex, who is risk-neutral, is looking for an one-bedroom apartment to rent for the month of August while he's on vacation in Seattle. All of the one-bedroom apartments in the neighborhood where he wants to stay are of equal quality, but 70 percent rent for $700 per month, 20 percent rent for $600 per month, and 10 percent rent for $500 per month. The first apartment Alex finds rents for $700 per month. If the cost to Alex of searching for an apartment is $40, then searching for another apartment is a gamble with an expected value of:

a. -$10.
b. $0.
c. $10.
d. $20.

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Answers: 2

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Alex, who is risk-neutral, is looking for an one-bedroom apartment to rent for the month of August w...
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