Lori, who is risk averse, has two pieces of jewelry, each worth $1,000. She plan
ID: 1106546 • Letter: L
Question
Lori, who is risk averse, has two pieces of jewelry, each worth $1,000. She plans to send them to her sister's firm in Thailand to be sold there. She is concerned about the safety of shipping them. She believes that the probability that any box shipped wil not reach its destination is 0. Is her expected utility higher if she sends the articles together or in two separate shipments? Lori's expected utility is O A. the same whether she sends the jewelry to Thailand in one box or in separate boxes. B. higher if she sends the jewelry to Thailand in separate boxes regardless of her preferences for risk. OC. higher if she sends the jewelry to Thailand in one box because she's ik averse 0 D. higher if she sends the jewelry to Thailand in one box regardless of her preferences for risk. E. higher if she sends the jewelry to Thailand in separate boxes because she's risk averse.Explanation / Answer
Solution: is higher if she sends the jewellary to Thailand in seperate boxes because she's risk averse.
Explanation: Risk averse are those investor who, when faced with two investments with same expected return however different risks, will prefer the one with the lower risk as it is this scenari with Lori
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