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Suppose you won the lottery and had two options: (1) receiving $0.9 million or (2) taking a gamble in which, at the flip of a coin, you receive $1.8 million if a head comes up but receive zero if a tail comes up.

What is the expected value of the gamble? Enter your answer in millions. For example, an answer of $500,000 should be entered as 0.5. Round your answer to one decimal place.

$ million

Would you take the sure $0.9 million or the gamble?

If you chose the sure $0.9 million, would that indicate that you are a risk averter or a risk seeker?

Suppose the payoff was actually $0.9 million - that was the only choice. You now face the choice of investing it in a U.S. Treasury bond that will return $976,500 at the end of a year or a common stock that has a 50-50 chance of being worthless or worth $1,890,000 at the end of the year. The expected profit on the T-bond investment is $76,500. What is the expected dollar profit on the stock investment? Round your answer to the nearest dollar.

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The expected rate of return on the T-bond investment is 8.5%. What is the expected rate of return on the stock investment? Round your answer to the nearest whole number.

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Exactly how large would the expected profit (or the expected rate of return) have to be on the stock investment to make you invest in the stock, given the 8.5% return on the bond? Round your answer to the nearest whole number. If no exact answer can be obtained, enter 0.

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