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QUESTION 3 (25 MARKS) The following shows the expected percentage returns on three stocks over the next six years: Stock Year A B 1 10
QUESTION 3 (25 MARKS) The following shows the expected percentage returns on three stocks over the next six years: Stock Year A B 1 10 8 2 5 4. Percentage Return (%) 3 4 6 8 4.80 6.4 12 10 5 12 9.6 6 15 12 6 5 10 6 Required: (i) Find the expected return for each of the stock. (6 marks) (ii) Compute the variance and standard deviation for stock A, B and C. Show your working. (15 marks) (ii) Justify how can you minimize the risk of the above combination of stocks. (4 marks)
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