Suppose that,in an experimental setting,100 students are presented with two situations involving risk and return.The students are first asked to choose between Gamble A and Gamble B,where:
Gamble A: The student will receive $1 million with a 100% probability.
Gamble B: The student will receive $1 million with an 89% probability,$5 million with a 10% probability,and $0 million (nothing)with a 1% probability.
Explain the process of finding the expected values of Gambles A and B.Which option would a risk-neutral student choose? Why?

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The Answer of Suppose that,in an experimental setting,100 students are presented with two situations involving risk and return.The students are first asked to choose between Gamble A and Gamble B,where:
Gamble A: The student will receive $1 million with a 100% probability.
Gamble B: The student will receive $1 million with an 89% probability,$5 million with a 10% probability,and $0 million (nothing)with a 1% probability.
Explain the process of finding the expected values of Gambles A and B.Which option would a risk-neutral student choose? Why?

Suppose That,in an Experimental Setting,100 Students Are Presented with Two