Draw the decision tree and calculate the expected value of the three investment choices. Choose the investment that has the maximum expected value. What is your investment choice?
What will the guaranteed return for the bank deposit have to be to change your decision in favor of the bank deposit?
Create a spreadsheet that permits you to perform the following sensitivity analysis: What must the value of the largest return (currently 7%) for the bond fund be, for the expected value of the bond fund to be equal to the expected value of the growth fund?