Question 4 (20 Marks) Everest Company of investment was established in 2015 and it has the different arena of investment portfolio Manufacturing is one of the successful sector and currently it has also manufacturing the herbal and supplying in the major cities in the Nepal Government of Nepal is taking the export promotion and import substitution policy in the fiscal policy 2021 Local and central government has given the subsidies for the manufacturing firms and there is the tax rebate to the manufacturing in the specific economic zone The Research and development department of the projected the income report as follows Prob 0 1 0 2 0 3 0 25 0 15 Earning 10 15 20 12 18 a What is the expected risk and return of the project (5 Marks ) b What is coefficient of variation and why it is important Calculate the value of coefficient of variation (5 Marks) c Suppose the firm has Rs 100 millions net profit in last year The BOD is planning to invest this profit after paying 10 dividend to its stockholders and there are the different investment opportunities in the market Suppose you are the financial officer of Everest Company, do you invest the entire retain earning amount in a single investment sector If yes, explain your justification, if no, interpret in line with Markowitz model ( 10 Marks )

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Question 4 (20 Marks) Everest Company of investment was established in 2015 and it has the different arena of investment portfolio. Manufacturing is one of

Question 4(20 Marks)

Everest Company of investment was established in 2015 and it has the different arena of investment portfolio. Manufacturing is one of the successful sector and currently it has also manufacturing the herbal and supplying in the major cities in the Nepal. Government of Nepal is taking the export promotion and import substitution policy in the fiscal policy 2021. Local and central government has given the subsidies for the manufacturing firms and there is the tax rebate to the manufacturing in the specific economic zone. The Research and development department of the projected the income report as follows.

Prob.	0.1	0.2	0.3	0.25	0.15
Earning	10%	15%	20%	12%	18%

a. What is the expected risk and return of the project.(5 Marks)

b. What is coefficient of variation and why it is important ? Calculate the value of coefficient of variation.(5 Marks)

c. Suppose the firm has Rs. 100 millions net profit in last year. The BOD is planning to invest this profit after paying 10% dividend to its stockholders and there are the different investment opportunities in the market. Suppose you are the financial officer of Everest Company, do you invest the entire retain earning amount in a single investment sector. If yes, explain your justification, if no, interpret in line with Markowitz model. (10 Marks)