Question

Life Is Good Financial Services has provided Good Things to Eat Groceries a proposal for in-store branches in two of its four Davidson locations. Good Things to Eat counter proposed opening one in-store branch in one of the two proposed locations as a test case. The locations would be identified as the Lily Branch or the Daisy Branch. Given the following statistics and forecasts compiled by Life Is Good regarding the two alternatives, which branch should be used as a test case? Base your recommendation on returns and risk.

	Expected Return	Standard Deviation	Correlation Coefficient Other Services	Percentage Total Assets
In-store branch at Lily location	15.00%	6.50%	0.6	5.00%
In-store branch at Daisy location	16.50%	8.00%	0.4	5.00
Existing facilities	12.00	5.00		95.00

Answer 1