2. If your bookie is going to break your legs tomorrow unless you have $10k, and no less will do, and you have $5k in your pocket, then you should bet the Knicks and hope for the best. Go Melo Yellow!
(In reality, I don't know if it could be optimal to make a bet with negative expected growth, unless you are hedging another bet which has become much bigger than your standard Kelly stake, e.g. after winning 24 bets in a 25 team parlay, you may have effectively won $240,000, and wagering that amount on any bet no matter the edge would be overbetting your roll).
I'm interested in seeing the answer (also, this makes me want to read more about Kelly, specifically this book: The Kelly Capital Growth Investment Criterion )
Looking forward to seeing who gets the answer.