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2] Mark Smith is an enormously wealthy investor who has built his fortune through his legendary investing acumen and his sound application of engineering risk benefit principles. He currently is reviewing three investment strategies, from which he will adopt one. He has available a moderately aggressive investment option (MAO), a very aggressive investment option (VAO), and a countercyclic investment option (CCO). As we know, returns on investments are not certain and different investment strategies will yield different results depending on market conditions. Mark has conducted extensive market research, and currently believes that there are four possible scenarios that might occur over the lives of these investments: a strong growth economy, an improving economy, a stable economy, or a worsening economy. He estimates that his profits under the four scenarios are as follows: a. Draw and label the decision tree that describes the decision facing Mark Smith. Be sure to include the do-nothing-alternative as an option. (10) b. Suppose that Smith is an EMV decision maker. Suppose he has estimated the probabilities of the potential outcomes as so: P( Strong Economy)=.2, P( Improving Economy) =.2,P( Stable Economy )=.4,P( Worsening Economy )=.2. Determine the optimal alternative. (20) c. Develop a reasonable (non-pathological) risk averse preference curve for monetary amounts between - $20 million and $45 million. Determine the preferred strategy for the decision maker that you've modeled with your curve, assuming the probabilities cited in part (b). (15) d. For the EMV decision maker modeled in part b, determine what perfect information would be worth. (15) e. Suppose one of Smith's colleagues has convinced Mark that a "worsening economy" will not occur. If that colleague were completely reliable, when would it be appropriate for Smith to choose the countercyclic investment strategy? (10) Itry not to read too deeply into this question; no additional assumptions should be required]