An investor is considering 3 different opportunities: stock market, bond market, and money market. The payoff (return) for each opportunity will depend on the economic conditions. The economic conditions may be excellent, good, or poor. If the investor chooses to invest in stock market he will make $10,000, $8,000, and $6,000 under excellent, good, and poor economic conditions, respectively. On the other hand, if the investor chooses to invest in bond market he will make $14,000, $15,000, and $2,000 under excellent, good, and poor economic conditions, respectively. Finally, if the investor chooses to invest in money market he will make $7,000, $8,000, and $9,000 under excellent, good, and poor economic conditions, respectively. 1. 1.1. 1.2. 1.3. 1.4. Provide the payoff matrix; Draw the decision tree; If the investor is optimistic, what decision should he make? If the investor is conservative, what decision should he make? 2. Suppose the probabilities of excellent, good, and poor economic conditions are 20%, 40%, and 40%, respectively. 2.1. What decision the investor should he make using the expected value approach? 2.2. What is the expected value of perfect information? An investor is considering 3 different opportunities: stock market, bond market, and money market. The payoff (return) for each opportunity will depend on the economic conditions. The economic conditions may be excellent, good, or poor. If the investor chooses to invest in stock market he will make $10,000, $8,000, and $6,000 under excellent, good, and poor economic conditions, respectively. On the other hand, if the investor chooses to invest in bond market he will make $14,000, $15,000, and $2,000 under excellent, good, and poor economic conditions, respectively. Finally, if the investor chooses to invest in money market he will make $7,000, $8,000, and $9,000 under excellent, good, and poor economic conditions, respectively. 1. 1.1. 1.2. 1.3. 1.4. Provide the payoff matrix; Draw the decision tree; If the investor is optimistic, what decision should he make? If the investor is conservative, what decision should he make? 2. Suppose the probabilities of excellent, good, and poor economic conditions are 20%, 40%, and 40%, respectively. 2.1. What decision the investor should he make using the expected value approach? 2.2. What is the expected value of perfect information