Investments Strategy

Problem Definition

An investor wishes to invest €12,000 over a 1-year period, although he/she must decide to invest in market shares and/or gold. The profitability ratios estimated for each investment are based on the possible states of economy (see Table).

Investment	Growth	Mean Growth	Stabilisation	Poor Growth
Market shares	5	4	3	-1
Gold	2	3	4	5

Consider a zero-sum Games Theory model with two players and answer the following:

a) How should the investor invest the €12,000 to carry out the optimal strategy?

b) What mean profitability value is obtained? What is the profit for the investor?