Question 4. State Preferences Theory. Person A will invest a certain amount of money, i.e., he/she will invest the same amount of money regardless of which asset is chosen. The investment horizon is one year. Person A may choose between two different assets, X and Y. The discount factor is assumed to be the same for both assets. A financial analyst has estimated the probabilities and the corresponding expected prices after one year for asset X and Y, respectively. State 2 3 4 5 6 7 Probability 0.35 0.05 0.05 0.10 0.15 0.20 0.10 E[(price(X)], EUR 25 35 45 30 25 40 50 E[(price(Y)], EUR 10 20 30 15 5 25 30 (a) Calculate the expected value and price variance for both assets. (b) Which asset should A choose if X and Y are compared in terms of stochastic dominance (of the second degree)