C04 · Lesson 18 of 22 · 16 min · 5 hands-on tasks
Risk and Utility
Brookvale offers Halden its biggest contract yet: 200 council homes at a fixed price. Expected profit $601,000, but a 15% chance of a $2M loss that could sink a $5M company. Measure how much risk a firm can stomach, turn gambles into certainty equivalents, and see why buying insurance can be the smart choice even though it lowers expected profit.
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