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Assume that you recently graduated with a major in finance, and you just landed a job in the trust department of a large regional bank.

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Assume that you recently graduated with a major in finance, and you just landed a job in the trust department of a large regional bank. Your first assignment is to invest $100,000 from an estate for which the bank is trustee. Because the estate is expected to be distributed to the heirs in approximately one year, you have been instructed to plan for a 1-year holding period. Furthermore, your boss has restricted you to the following investment alternatives, shown with their probabilitie and associated outcomes. You are trying to determine if you should invest the entire $100,000 in High Tech, the entire amount into CollectMe, Inc., or if you should invest $50,000 in each of the stocks. Complete the Table below to assist you in your evaluation: Probability Return on High Tech Return on CollectMe Return on Portfolio CollectMe, Inc. 85% 0.3 State of the Economy Recession Average Above Average High Tech -22% 25% 0.4 10% 0.3 40% -10% (a) Calculate the Expected Return, f, for High Tech. Show your work and place your answers in the table above. (b) Calculate the Standard deviation, o, for High Tech and show your work. I (c) Calculate the expected Return, f, for CollectMe. Show your work and place your answers in the table above. (d) Calculate the Standard deviation, o, for CollectMe and show your work. (e) Using your calculations above, how would you explain the options to your client if you were only able to invest in one of these stocks? (1) Now calculate the Coefficient of Variation for each of these stocks. What do these calculations show you? How would you explain this to your client? (e) You now believe that your client might be better off investing $50,000 in each of these stocks. Calculate the expected Return, , standard deviation, o, and the Coefficient of Variation for the portfolio. (Show your work!) (h) Using all of the information in this problem, what option would you recommend to your client. Explain your answer thoroughly

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