3. An investor, Joan, has a utility function U = W⁰·⁵, where W represents her total wealth. She is considering a risky investment where there is a 20% probability that her wealth will be $400 and an 80% probability that her wealth will be $100. To avoid the uncertainty of the investment and receive her expected wealth with certainty, the maximum risk premium Joan would be willing to pay is ____(3)____.

Blanks (5)-(6) Memecoins are cryptocurrencies often created as jokes or based on internet trends (like Dogecoin, which started from a dog meme). Unlike stocks, anyone can create a new cryptocurrency in minutes with little cost or oversight. The 2025 crypto bull market reignited interest in memecoins. Some were legitimate projects, but many were scams. A common scam called a "rug pull" works like this: creators launch a token, promote it heavily on social media to attract buyers, then suddenly sell all their own tokens and disappear with the money—leaving investors holding worthless coins. The problem? Regular investors had no easy way to tell which projects were real and which were scams. Creators knew their own intentions, but buyers could not verify whether a project was trustworthy. As a result, buyers offered only average prices for all tokens. This made it hard for honest projects to compete, and many gave up—leaving the market flooded with scams and destroying overall trust. 5. Define asymmetric information and identify what specific information creators have that investors lack in the memecoin market. Answer in less than 5 sentences. ____(5)____

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