Before proceeding calculate the expected rate of return and the standard deviation for each asset A and B as shown in Table 6.1.

Asset A Asset B Rate of return (%)
Probability of occurrence, P(ri)
Rate of return (%)
Probability of occurrence, P(ri)
6 0.05 8 0.25 8 0.10 10 0.50 10 0.20 12 0.25 12 0.30 14 0.20 16 0.10 18 0.05