Bob is offered the following wager by Nabob. For a payment of $20, Bob can flip five fair coins. If Bob flips three or more heads he wins $100, otherwise he loses $100. Which of the following statements is correct?
A) If Bob is risk averse, he will accept this fair gamble.
B) If Bob is risk averse, he will not accept this fair gamble.
C) If Bob is risk averse, he will not accept this unfair gamble.
D) If Bob is risk neutral, he will not accept this fair gamble.
E) Answers b and d are correct.

Question

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The Answer of Bob is offered the following wager by Nabob. For a payment of $20, Bob can flip five fair coins. If Bob flips three or more heads he wins $100, otherwise he loses $100. Which of the following statements is correct?
A) If Bob is risk averse, he will accept this fair gamble.
B) If Bob is risk averse, he will not accept this fair gamble.
C) If Bob is risk averse, he will not accept this unfair gamble.
D) If Bob is risk neutral, he will not accept this fair gamble.
E) Answers b and d are correct.

Bob Is Offered the Following Wager by Nabob