Question 1 P.FINANCE

Question 1

Syarikat Elective (M) Sdn Bhd is considering investing RM10,000. The following information is the probability distribution of returns for Project Batu Nilam (BN) and Project Pengkalan Nipah (PN)

Probability	Rate of returns (%)
	Project
	Project BN	Project PN
0.1	-25	-10
0.2	-8	2
0.4	18	14
0.3	40	19

From the above information you are required to:

A. calculate the expected rate of return of each project. (4 Marks)

B. assume that Syarikat Elective (M) Sdn Bhd will be investing RM6,000 in Project BN and RM4,000 in Project PN, determine the expected rate of return on the portfolio.

(3 Marks)

C. based on your calculation in part (a) and (b), advise Syarikat Elective (M) Sdn Bhd on expected rate of return on individual project compared to portfolio. (3 Marks)