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# Assignment help 1136

1. Suppose Feng have \$50 and you would like to purchase some lottery tickets. Assume that he can win with 40% probability, and if he win, he can earn 100% of his investment (i.e., double the investment). On the other hand, if he lose, he loses 100% of his investment. Further assume that his utility function is given by u (w) = ?w2 + 100w. Answer each of the following.
• (a) Is Feng risk-averse, risk-neutral, or risk-loving? How do you know?
• (b) What is the expected value of the lottery if Feng invests all \$50?
• (c) If Feng want to maximize his expected utility, how much should he invest?

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