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Suppose Interest of 5% for Two Years Can Be Earned

Question 96

Multiple Choice

Suppose interest of 5% for two years can be earned on $1,000 saved today with no risk.What is the least amount a person would need to have a 50% chance of winning to be willing to face a 50% chance of losing $1,000 today and be considered risk averse?


A) $907.03 to be paid in two years
B) $1,000.01 to be paid in two years
C) $1,100.01 to be paid in two years
D) $1,102.51 to be paid in two years

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