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Question 21

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Suppose there are 125 risk averse individuals, each with a $1 to invest in a project at t = 0.The project will yield $1 if liquidated at t = 1 and $2.20 if liquidated at t = 2.At t = 0, no individual knows what his type will be at t = 1.If he turns out to be type D, his utility taction for consumption will be while if he turns out to be type L, his utility for consumption will be .It is known at t = 0 that 40% of the individuals will type D and 60% type L at t = 1.
-Suppose that you are a type L depositor.You assume that all type L depositor will withdraw at t = 1.If you decide to withdraw at t = 1 and happens to be the 100th depositor in the queue, how much will you get?


A) $1.35
B) $1.12
C) $1.00
D) $0.68
E) $0

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