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James Fromholtz is considering whether to invest in a newly formed investment fun. The funds objective is to acquire home mortgage properties at what it

James Fromholtz is considering whether to invest in a newly formed investment fun. The funds objective is to acquire home mortgage properties at what it hopes to be bargain prices. The fund sponsor has suggested to james that the funds performance will hinge on how the national economy performs in the coming year. Specifically he suggested the following outcomes. State of economy Probability Fund Returns Rapid expansion and recovery 10% 100% Modest growth 35% 40% continued recession 45% 10% falls into depression 10% -100% A) Based on these potential outcomes what is your estimate of the expected rate of return from this investment opportunity? B) Calculate the standard deviation in the anticipated returns found in part a? C) Would you be interested in making such an investment?

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