Consider the investments below:

project 1 : expected value 100

project 2 : expected value 100

project 3 : expected value 100

You have 1000 to invest and have the following options:

a) invest all your money in ine of the above

b) invest half in project 1 and half in project 2

c) half in project 1 and half in project 3

d) half in project 2 and half in project 3

Each project has two possible payoffs.

The payoff from project 1 are independent of the payoffs from the other two projects.

The payoffs from project 2 and project 3 are perfectly negatively correlated

Which strategy would reduce your risk and which one would eliminate it completely?

Question 8 - 13 marks Consider the investments in the table below Expected Value 100 investment Project 1 Project 2 Project 100 100 You have 1,000 to invest and you can decide among the following options a investing all your money only in one of the above projects investing half in Proct 1 andhaltin Project 2 thing lifi Project and all in Preta Investing in Project 2 and all in The worstom Prindependent of the parts from the otter in pect The payoffs from Project and tested content