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b. If the firm wishes to minimize risk, which alternative do you recullend Why? 6-8 Integrative-Expected return, standard deviation, and coctficient of variation Three assets-F,
b. If the firm wishes to minimize risk, which alternative do you recullend Why? 6-8 Integrative-Expected return, standard deviation, and coctficient of variation Three assets-F, G, and H-are currently being considered by Blane Manufacturing. The probability distributions of expected returns for these assets are shown in the following table. Asset H Asset G Asset F Return, k; Return, k, Return, k 40% 40% 35% 10 -20 20 10 - 10 -20 a. Calculate the expected value of return, k, for each of the three assets. Which provides the greatest expected return? b. Calculate the standard deviation, for each of the three assets' returns. Which appears to have the greatest risk? c. Calculate the coefficient of variation, CV, for each of the three assets. Which appears to have the greatest relative risk? Portfolio return and standard deviation Jane Warren is considering building a portfolio containing two assets, L and M. Asset L will represent 40% of the dollar value of the portfolio, and asset M will account for the oth . The expected returns over the next 6 years, 2002-2007, for each of t! shown in the following table. 6-9
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