(A) Construct a decision tree to help the investor make his decision. Make sure to label all decision and chance nodes and include appropriate costs, payoffs and probabilities.
(B) What is the best choice for the investor? Why?
(C) Suppose that investor has an exponential utility function for final assets with a risk tolerance parameter equal to $60,000. Which investment opportunity will he prefer in this case? What is his certainty equivalent?
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