Year |
Asset F |
Asset G |
Asset H |
2016 |
7 |
10 |
15 |
2017 |
6 |
8 |
16 |
2018 |
3 |
19 |
19 |
2019 |
11 |
9 |
11 |
Using these assets, you have isolated the three investment alternatives shown in the following table.
Alternative |
Investment |
1 |
100% of asset F |
2 |
75% of asset F and 25% of asset G |
3 |
50% of asset F and 50% of asset H |
a) Calculate the expected return over the 4-year period for each of the three alternative
b)Calculate the standard deviation of returns over the 4-year period for each of the three alternatives.
c)Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives.
d)On the basis of your findings, which of the three investment alternatives do you recommend? Why?
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Answer:
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