Scenario 5.1: Upon graduation, you are offered three jobs. Some job only offers a fixed salary, some job also offers a potential bonus.           Company Income without Bonus Income with Bonus Probability of Receiving Bonus Samsa Exterminators 100,000 200,000 .10 Gradgrind Tech 100,000 190,000 .90 Goblin Fruits 115,000 115,000 .50   Assuming that your utility for income is U=I0.5, your utility of expected income from working at Gradgrind Tech is 

Consider the following information about job opportunities for new college graduates in Megalopolis: Table 5.1 Major Probability of Receivingan Offer in One Year Average Salary Offer Accounting .95 $25,000 Economics .90 $30,000 English .70 $24,000 Poli Sci .60 $18,000 Mathematics 1.00 $21,000 Refer to Table 5.1. Ranked highest to lowest in expected income, the majors are:

When negative network externalities are present

If an asset’s beta is high, its:

Figure 4.2.3Refer to Figure 4.2.3 above. As depicted in the figure, leads us to believe that:

Any risk-averse individual would always: 

Figure 5.2.1Refer to Figure 5.2.1 above.  Which of the two figures describes a risk-seeking individual? (Please read the labels carefully)

Figure 5.1.1Refer to Figure 5.1.1 above. Which of the two jobs is more risky?

Scenario 5.8: Risk-neutral Icarus Airlines must commit now to leasing 1, 2, or 3 new airplanes. It knows with certainty that on the basis of business travel alone, it will need at least 1 airplane. The marketing division says that there is a 20% chance that tourism will be big enough for a second plane only (Light situation). Otherwise, tourism will be big enough for a third plane (Heavy situation). This, plus revenue information, yields the following table:Planes Leased                  Tourism Profit                    Expected  Profit                                  Light                   Heavy           2                              $100 million    $30 million              3                              $10 million    $140 million           Refer to Scenario 5.8. The value to Icarus Airlines of complete information is

Which of the following assets is almost riskless?