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QUESTION 2 As a financial analyst for an investment firm, you are responsible for advising your company on share capital investment, and you are provided
QUESTION 2
As a financial analyst for an investment firm, you are responsible for advising your company on share capital investment, and you are provided with two different investments: Facebook and Instagram. The following is the data presented to you.
State of economy | Probability | Rate of Returns | |
| | ||
Recession | 0.25 | 0.07 | 0.13 |
Moderate | 0.50 | 0.15 | 0.15 |
Strong growth | 0.25 | 0.23 | 0.17 |
Required:
- Based on the above information, calculate the followings:
-
- The expected value for each investments return
-
- The standard deviation of the return for investment in Facebook and Instagram
- Which investment should you advise your company to choose? Justify your answer.
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