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Forex rate: Expected value paradox
Let us suppose at present
1 dollar = 1 euro
After 1 year
There is 50% chance that 1 dollar = .80 euro ...[1]
And there is 50 % chance that 1 dollar = 1.25 euro ...[2]
Therefore expected value ...
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resolving expected utility of st. petersburg paradox with logarithmic utility
St. Petersburg paradox is a game where you toss a fair coin repeatedly and if it lands heads on the $k$th trial you get $2^n$ dollars. Expected utility of game is:
$E(U) = \sum_{k=1}^{\infty}[0.5*0 + ...