Question uiz Instructions ect the best response to each question. Que O Que ?Que

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Question uiz Instructions ect the best response to each question. Que O Que ?Que Question 6 5 pts Assume there is a new on-line game where participants can bet on the coin toss that takes place at the start of the Bowl. While there is no entry fee, a participant wins $500 if he picks the team that wins the pre-game coin toss. The participant loses $505 if he picks the team that loses the pre-game toss. Assume a fair coin is used. Which of the following is TRUE? Super Time Runnin Attemot due: Ju 36 Minutes Since there is a 50% chance of being correct. risk neutral participants would be willing to play the game. The expected value to a participant playing the game is losing $2.50. Therefore, only risk seeking participants will play the game O The expected value to a participant playing the game is winning $2 50. Therefore. isk.averse plavers will lay the game. g the game is losing $h60. Thercfore, no participants regardless ot whether they are risk averse risk neutral or risk seeking will play the gamc The risk premium to the sponsors of this game is negative.

Explanation / Answer

Expected value = 0.5(500 - 505) = -2.5

since the expected value is negative no participant should be willing

so option d

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