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An investor is considering how to invest his money. He has two options ? either a domestic mutual fund that only invests in the Capital
An investor is considering how to invest his money. He has two options ? either a domestic mutual fund that only invests in the Capital Goods sector or an international aggressive mutual fund that invests in promising startups in the Commercial & Professional Services sector. The payoff (profit) after one year for these investments depends on the state of economy. The investor thinks that there is 0.5 probability that the economy will improve and 0.5 probability that economy will decline. The estimated payoffs are shown in the table below.
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