[solution] » A borrower takes out a loan from a bank and can invest in a risky project that will produce revenue.
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A borrower takes out a loan from a bank and can invest in a risky project that will produce revenue.
More:A borrower takes out a loan from a bank and can invest in a risky project that will produce revenue of $185 with probability 0.75 and revenue $125 with probability 0.25. The bank requires a loan repayment of $115. The other alternative for the borrower is to invest his loan in a non-risky project that will produce revenue of $165 with certainty. Then from the borrower's perspective, the expected payoff Answer on the risky project is highest on the non-risky project is highest on the two project is exactly the same none of the above Additional Requirements Level of Detail: Only answer needed
This question was answered on: Feb 21, 2020
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