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Economy (state of nature) Payoff (in $1, 000) S1: Recession S2: Moderate S3: Strong dj: Stock 18 33 40 d2: Mutual fund 27 32 33

Economy (state of nature) Payoff (in $1, 000) S1: Recession S2: Moderate S3: Strong dj: Stock 18 33 40 d2: Mutual fund 27 32 33 d3: Bond 28 31 32 d4: Money market 30 30 30 Probability, P[S; ] 0. 2 0 .5 0.3

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