Smith has an investment opportunity that pays 6,900 with probability ½ and loses 6,400 with probability ½. A) If his current wealth is M = 10,000, and his utility function is U equals square root of M, will he make this investment? Show your work. B) Will he make the investment if he has 9 equal partners? Show your work. (Hint: Each partner's share is 1/10 of gains or losses.)
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