1. You have been given the following investment decision-making matrix:

States of Nature

Security Growth Medium Growth No Change Low

Bonds 15% 11% 10% 6%

Stocks 22% 14% 8% -2%

Deposit 10% 10% 10% 10%

i) Using appropriate computation, recommend which security a conservative investor will invest in

ii) Using appropriate computation, recommend which security an aggressive investor (Risk taker), will invest in.

iii)Using appropriate computation, recommend which security a middle-ground investor will invest in if the coefficient of the aggressive investor is 0.6 and the conservative investor is 0.4

Answer rating: 100% (QA)

To recommend investments for different types of investors based on the provided investment decisionmaking matrix we need to calculate the expected ret... View the full answer