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.
You have the choice between two assets, Asset A which is some sort of
a conventional asset and Asset S which you can think of
as a fund that only invests in sustainable companies.
Any additional money allocated to Asset S would thus support sustainable
companies that among other things pay fair wages and have lower carbon emissions
than their peers. Both of those assets have 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 sustainability profile that you would feel best with in a real world situation.