Case 2: [Hints: Risk and return

Jane is considering investing in three different shares or creating three distinct two-share portfolios. Jane considers herself to be a rather conservative investor. She is able to obtain forecast returns for the three securities for the years 2008 to 2014. The data are as follows: In any of the possible two-share portfolios, the weight of each share in the portfolio will be 50%. The three possible portfolio combinations are AB,AC and BC. Required 1 Calculate the expected return for each individual share. 2 Calculate the standard deviation for each individual share. 3 Calculate the expected returns for portfolio AB,AC and BC. 4 Calculate the standard deviations for portfolios AB,AC and BC. 5. Would you recommend that Jane invest in the single share A,B or C or the portfolio AB,AC or BC ? Explain your answer from a risk-return viewpoint