willsucceed

his aspiration levels is 2.1 Mill$ - so he requires a 5% return at 80% probability.
I agree with this statement
If he selects layer 2. there are 3 states of the world only and for our purpose they can be converted into 2 states of the world.
So lets says he selects layer 2.
1) The other two probabilities 5% (80 percent probabillity), 9% (10 percent probabillity) only provide him with 4.9% at 90% probability. That is not correct:There is a 90 percent chance that he will earn atleast 5%. (80 percent chance of 5% return and 10% chance of 9% return). FIRST CONDITION SATISFIED.
2) There is a 10 percent chance that he will earn -3%. So his minimum porfolio value is .97 * 2000000 = 1940000. 1940000  1800000 so SECOND CONDITION OF MINIMUM PORTFOLIO RETRUN OF 1800000 IS ALSO SATISFIED.
I dont know why you keeep giving me expected return calculations. who said anything about expected return or requiring a expected return. all that was said was that the portfolio should not fall below amount 1800000 and there should be atleast 80 percent chance of earning 21 mil.   
Forget about the suggested answer in the book.  just read the question and figure out what it is asking for and then see which answer is correct