EXCEL Stocks or Bonds (Decision Trees, Risk and Utility Theory) We are deciding whether to invest our savings of $100,000 in stocks or bonds for the next year. (For the sake of simplicity, let us...

EXCEL
Stocks or Bonds (Decision Trees, Risk and Utility Theory)

We are deciding whether to invest our savings of $100,000 in stocks or bonds for the next year. (For the sake of simplicity, let us assume that we are either fully investing in stocks or fully in bonds.) We believe that there is 70% chance of seeing growth and 30% chance of going into a recession throughout the year. If we see growth, stocks will go up by 25% and bonds go up by 10%. If we see recession, stocks will fall by 20%, but bonds will go up by 5%.
--> Assuming that we are risk-neutral, make a decision tree that decides whether we should invest in stocks or bonds. Put your solution in the tab “Investment_Risk_Neutral”.