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An investor with $10,000 available to invest has the following options; (1) he can invest in a riskefree savings account with a guaranteed 3% annual

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An investor with $10,000 available to invest has the following options; (1) he can invest in a riskefree savings account with a guaranteed 3% annual rate of return; (2) he can invest in a fairly safe stock, where the possible annual rates of retum are 6%,8%, or 10%; or (3) he can invest in a more risky stock, where, the possible annual rates of return are 1%,9%, or 17%. The investor can piace all of his available funds in any one of these options, or he can split his 510,000 into two $5,000 investments in any two of these options. The joint probability distnbution of the possible return rates for the two srocks is given in the file. P09_34,xisx. a. Use Precisiontree to ldentify the strategy that maximizes the investor's expected one-year earnings. To maximize the expected return, this investor should invest maximized at 4 b. Perform a sensitivity analysis on the coptimal decision, letting the amount available to invest and the risk-free return both vary, one at a time, plis or minus 100% from their base values, and summarize your findings. Varying the amount avallable to invest has impoct on the investment decision. Varying the risk-free annual fate of return has impact on the Investment decision

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