Question
Question 3 [25] The following probability distribution for assets X and Y reflects the expected returns in rands per unit invested and the probabilities of
Question 3 [25] The following probability distribution for assets X and Y reflects the expected returns in rands per unit invested and the probabilities of receiving such returns:
Asset x |
| Asset Y |
|
Return (R) | Probability | Rand (R) | Probability |
8.00 | 0.10 | 9.60 | 0.25 |
9.00 | 0.20 | 9.90 | 0.35 |
11.00 | 0.30 | 12.00 | 0.40 |
12.00 | 0.40 |
|
|
Required: Round off all calculations to two decimals.
3.1. Calculate the expected rates of return, variances, standard deviations and coefficients of variation for the two assets. (19)
3.2. Compare the results of your calculations for the two assets and then indicate which asset is the better investment. Give reasons for your answer. (6)
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