Final answer:
The student's task involves conducting a one-way sensitivity analysis on risk tolerance to understand how investment preferences change with varying levels of risk tolerance, commonly applied in financial mathematics and decision theory.
Step-by-step explanation:
The question tasks the student with performing a one-way sensitivity analysis on risk tolerance, which likely relates to comparing different investment options in terms of their risk and return. This would involve adjusting the level of risk tolerance to see how it would affect the certain equivalent, which is a measure of what a guaranteed outcome would need to be to be as attractive as a risky option. This kind of analysis is used to understand how sensitive an investment's appeal is to changes in the investor's risk tolerance, and would typically be represented using a chart that shows certain equivalents plotted against various levels of risk tolerance
The analysis based on the chart would allow us to interpret how investor preferences for certainty change with their willingness to take on risk. For example, if an investment has a high expected return but also high variability, investors with low risk tolerance may find it less attractive compared to those with high risk tolerance.
It's important to acknowledge that the other parts of the question seem to be related to investment decision-making, calculating expected values of investments, and evaluating safety and risk, which are concepts covered in financial mathematics and decision theory.