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Suppose you have 2 alternative investments. Investment 1 is very safe; you can invest $1000 at a rate of 2% for the next 10 years.

Suppose you have 2 alternative investments. Investment 1 is very safe; you can invest $1000 at a rate of 2% for the next 10 years. Investment 2 is very risky; you can invest your $1000 at a rate of 8%; however, there is a 50/50 chance you will receive nothing in the end. Which investment do you chose and why?

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