Portfolio analysisYou have been given the expected return data shown in the first table on three assets F, G, and H over the period 2019-2022: LOADING... .

Using these assets, you have isolated the three investment alternatives shown in the following table: LOADING... .

a.Calculate the average 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 think performed better over this period? Why?

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Part 1

a.The expected return over the 4-year period for alternative 1 is enter your response here

%. (Round to two decimal place.)

Part 2

The expected return over the 4-year period for alternative 2 is enter your response here

%. (Round to two decimal place.)

Part 3

The expected return over the 4-year period for alternative 3 is enter your response here

%. (Round to two decimal place.)

Part 4

b.The standard deviation of returns over the 4-year period for alternative 1 is enter your response here

%. (Round to two decimal places.)

Part 5

The standard deviation of returns over the 4-year period for alternative 2 is enter your response here

%. (Round to two decimal places.)

Part 6

The standard deviation of returns over the 4-year period for alternative 3 is enter your response here

%. (Round to two decimal places.)

Part 7

c.The coefficient of variation for alternative 1 is enter your response here

. (Round to three decimal places.)

Part 8

The coefficient of variation for alternative 2 is enter your response here

. (Round to three decimal places.)

Part 9

The coefficient of variation for alternative 3 is enter your response here

. (Round to three decimal places.)

Part 10

d.On the basis of your findings, which of the three investment alternatives do you recommend? Why?

Alternative 1 posted the highest return but Alternative 2 the lowest volatility (risk). When thinking about performance, it is instructive to ask how a hypothetical investor might view these alternatives. She would first note Alternative 2 is clearly preferable to Alternative 3 because it offers the same expected return but no volatility in returns. Now, as between Alternatives 1 and 2, Alternative 1 offers a higher expected return but also has more volatile returns.

Without knowing an investor's risk tolerance, it is not possible to say whether Alternative 1 or 2 is "best."

Is the previous statement True or False?

Click on the icon here in order to copy the contents of the data table below into a spreadsheet.)

Historical Return

Year

Asset F

Asset G

Asset H

2019

11%

12%

9%

2020

12%

11%

10%

2021

13%

10%

11%

2022

14%

9%

12%