=+35. Investment decision. An investor wants to invest $1 million for one year in a portfolio of stocks. She has narrowed her choice to two portfolios. The value of the portfolio depends on the interest rates. There are two states of nature:

an increase in the interest rates and a decrease in the interest rates. She estimates the probability of an increase in the interest rates to be 0.4.

Decrease in Interest Rates Increase in Interest Rates