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Mr. Raditsebe recently retired from Botswana Power Corporation where he had been working for 20 years and has asked you to help him identify investment
Mr. Raditsebe recently retired from Botswana Power Corporation where he had been working for 20 years and has asked you to help him identify investment opportunities in the domestic market. Below is the state of the economy with the potential assets to be invested in, asset X and asset Y. NB: The returns are already converted from the percentages. Calculate: i. Expected return for X and Y [4 marks] ii. Variance for X and Y [8 marks] iii. Standard deviation on the given assets. [4 marks] iv. If the overall market standard deviation is 18% and the risk-free rate is 2%, while the expected market return is 9.5%, find the expected return using CAPM. [4 marks] Mr. Raditsebe recently retired from Botswana Power Corporation where he had been working for 20 years and has asked you to help him identify investment opportunities in the domestic market. Below is the state of the economy with the potential assets to be invested in, asset X and asset Y. NB: The returns are already converted from the percentages. Calculate: i. Expected return for X and Y [4 marks] ii. Variance for X and Y [8 marks] iii. Standard deviation on the given assets. [4 marks] iv. If the overall market standard deviation is 18% and the risk-free rate is 2%, while the expected market return is 9.5%, find the expected return using CAPM. [4 marks]
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