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Question 2 (26 marks) An investor is considering the possibility of buying shares that are issued by Asante Gold and Sanlam Namibia, as tabulated below:
Question 2 (26 marks) An investor is considering the possibility of buying shares that are issued by Asante Gold and Sanlam Namibia, as tabulated below: Possible Outcomes Probability Returns 1. Asante Gold N$ Pessimistic Most likely Optimistic 0.5 0.3 0.2 19.00 14.00 22.00 2. Sanlam N$ Pessimistic Most likely Optimistic 0.7 0.15 0.15 34.00 27.00 48.00 2.1 What is the expected return if the investor chooses the shares from Asante Gold? (3) 2.2 Compute the variance of Asante Gold? (5) 2.3 Calculate the risk that the investor would face if they choose to acquire the shares from Asante Gold? (2) 2.4 What is the coefficient of variation of shares issued by Asante Gold? (2) 2.5 What is the expected return if the investor chooses the shares from Sanlam Namibia? (3) 2.6 Compute the variance of Sanlam Namibia? (5) 2.7 Calculate the risk that the investor would face if they choose to acquire the shares from Sanlam Namibia? (2) 2.8 What is the coefficient of variation of the shares issued by Sanlam Namibia? (2) 2.9 Which share would you recommend to the investor to acquire? Support your answer. (2)
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