... investment is ER = (0.999) ( -1 ,000,000) + (0.0 01) (1, 000,000,000) = $1, 000. The variance is σ2 = (0.999) ( -1 ,000,000 - 1, 000)2 + (0.0 01) (1, 000,000,000 - 1, 000)2 , or σ2 = 1, 000,998,999,000,000. ... σ2 = (0.5)(0 - 1. 025)2 + (0.25) (1 - 1. 025)2 + (0.2)(2 - 1. 025)2 + (0.05)(7.5 - 1. 025)2, or σ2 = $2. 812 . b. Richard’s nickname is “No-risk Rick.” He is an extremely risk-averse individual. ... is: EU = 0.5()90.5()+ 0.25() 10 0.5( )+ 0.2( ) 11 0.5( )+ 0.05( ) 16 .50.5( )= 3 .15 7. This is less than 3 .16 2, which is the utility associated with not buying the ticket (U (10 )...