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Q No. 5 Based on data in the following Table: - Economy Prob Firm X Firm Y Recession 0.1 -27.0% 27.0% Below avg 0.2 -7.0%

Q No. 5 Based on data in the following Table: -

Economy

Prob

Firm X

Firm Y

Recession

0.1

-27.0%

27.0%

Below avg

0.2

-7.0%

13.0%

Average

0.4

15.0%

15%

Above avg

0.2

25.0%

-11.0%

Boom

0.1

40.0%

-21.0%

  1. Compute the expected rate of returns for firms x and firm y.
  2. Compute the standard deviation for firms x and firm y.
  3. Compute the coefficient of variations for firm x and y.
  4. As a financial advisor which firm would you recommend for investment.

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