In the following, you will be asked to make a few investment choices by allocating
a hypothetical investment of €1000 to two assets.
As underlying story, assume you have €1000 in each round
and you want to invest them. However, you know that you will need the money in two
years. You also know that the market will be, with equal likelihood,
either in a good or a bad state in two years.
Both assets you are able to invest in have thus different returns depending on
if the market is in a good or a bad state in two years.
Your task is to allocate your hypothetical €1000 so that the investment has the
risk return profile that you would feel best with in a real world situation.