1) [1 +1.5+1.5 4 Marks] (a) In the first quarter of the current financial year, Larry Jones held an equally weighted portfolio in two assets, E Ltd and F Ltd (that is, 50% of his wealth was held in each asset). The monthly retums for each asset forthese 3 months were as follows: Asset E Ltd F Ltd July 4% 6% August -3% -1% September 2% 6% (i) Calculate the arithmetic average retum for the three months for the portfolio. ANS. (ii) Calculate the geometric average retum for the three months for the portfolio. (Show answer as a percentage correct to 2 decimal places.) ANS. T120 Mid-Trimester Assessment: FIN201 UG - Investment Management ANS. ANS. (b) Briefly explain: (i) The Australian investment framework; and (j) The steps in the investment process. Page 3 of 12 (c) Following are the expected retums for 2020 and the standard deviations of four risky assets. Calculate the coefficient of variation for each asset. [Show answers correct to 3 decimal places.] Based on your answer, state which asset you would prefer and why? Asset Bean Ltd Expected return ([E/R] 13% Marrow Ltd 12% Potato Ltd Pumpkin Ltd 11% 10% Standard deviation (SD) 11% 10% 9% 8%