Question: An investor is considering two investment options, one high risk and one low risk. The returns given performance parameters of the U.S. gross domestic product are given below in hundreds of dollars per ten thousand dollars invested.

GDP Growth

Under 1% 1%-3% Over 3%

Low Risk \[{{d}_{1}}\] \[-3\] 10 12

High Risk \[{{d}_{2}}\] \[-1\] 9 11

1. Use the optimistic method to determine the optimal investment. (6 points)
2. Use the conservative method to determine the optimal investment. (6 points)
3. Use the minimum/maximum regret method to determine the optimal investment. (8 points)
4. Suppose \[P({{s}_{1}})=0.21\] , \[P({{s}_{2}})=0.35\] , and \[P({{s}_{3}})=0.44\]
   Use the expected value method to determine the optimal investment. (10 points)
5. Find the Expected Value of Perfect Information (8 points).
   

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