1. Juan just won $2.5 million in the state lottery. He is given the option of receiving a total of $1.3 million now, or he can elect to be paid $100,000 at the end of each of the next 25 years. If Juan can earn 5% annually on his investments, from a strict economic point of view, which option should he take? Explain why.

2. You form the following investment portfolio:

$200,000 of portfolio in REITs, 10% annual return

$500,000 in stocks, 8% annual return

$300,000 in bonds, 4% annual return

If the standard deviation of returns in your portfolio is 5%, what is your coefficient of variation (i.e. risk to return ratio)? Round your answer to two decimal places.