Question
Portfolio analysis You have been given the expected return data shown in the first table on three assetsF, G, and Hover the period 2016-2019. EXPECTED
Portfolio analysis You have been given the expected return data shown in the first table on three assetsF, G, and Hover the period 2016-2019.
EXPECTED RETURN
YEAR ASSET F ASSET G ASSET H
2016 16% 17% 14%
2017 17% 16% 15%
2018 18% 15% 16%
2019 19% 14% 17%
ALTERNATIVE 1INVESTMENT 100% OF F
ALTERNATIVE 2 50% OF ASSET F AND 50% OF ASSET G
ALTERNATIVE 3 50% OF F AND 50% OF H
a. Calculate the expected return over the 4-year period for each of the three alternatives.
b. Calculate the standard deviation of returns over the 4-year period for each of the three alternatives.
c. Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives.
d. On the basis of your findings, which of the three investment alternatives do you recommend? Why?
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