An investor is faced with the following investment opportunities:

Investment Outlay Return (%)

1. 1,000 8

2. 1,000 20

3.2,000 5

4.3,000 30

5.3,000 12

i. Graph the investor's investment opportunity set if all investments are

made at time 0 and liquidated at time 1. [4 marks]

ii. If the market rate is 10%, determine the optimal investment decision

for the investor. Illustrate your response graphically.