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Which investment should he choose

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Question - Harritz Consultants, a famous financial analysis, has provided probability estimates for the four potential economic states for the coming year. The probability of a boom economy 10 percent, stable growth economy 15 percent, stagnant economy 50 percent and recession 25 percent. Below are the estimated returns of the individual investments for the coming year:

Investment Forecasted returns for each economy (%)

Boom Stable Growth Stagnant Recession

Share 25 12 4 -12

Corporate Bond 9 7 5 3

Government Bond 8 6 4 2

If Harritz is a risk averse investor, which investment should he choose?

Reference no: EM132764910

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