1. You are a risk averse individual. How much would you (most likely) be willing to pay to enter a gamble with the following outcomes: 40% of winning $400, 40% of winning $300, and $20% of winning $200? a. $350 b. $300 c. $250 d. You will not play for any amount.
2. An example of a non-diversifiable risk for an investor holding BP stock is that the company experienced a catastrophic oil spill in their Gulf of Mexico platform due to human errors. True or False?