Question

7. Mr. Thaggert is trying to decide whether to invest in stocks or in CD's(Certificate of deposit). If he invests in stocks and the interest rates go up, his stock investments go down by 2%, but he ģains î% in his CD's. On the other hand if the interest rates go down, he gains 3% in his stock investments, but he loses 1% in his CD's. a. Write a payoff matrix for Mr. Thaggert. b. If you were his investment advisor, what strategy would you advise?

Answer 1

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