QUESTION FOUR Lena is planning to invest in one of Australia's large mining companies: Fortescue Metals Group Limited (FMG), Rio Tinto Ltd (RIO), or BHP Group Ltd (BHP). Lena's investment choice depends on the expected performance of these companies' new projects. The information about these projects are provided below: The FMG Iron Bridge Construction (PROJECT A), the RIO Rail Track Project (PROJECT B), and the BHP South Flank Communications (PROJECT C) are currently being considered by FMG, RIO, and BHP, respectively. The following probability distributions of expected returns for these projects have been developed. PROJECT A PROJECT B PROJECT C Pri Return, 1 (%) Pri Return, r; (%) Pri Return, r (%) 1 0.10 40 0.30 35 0.10 40 2 0.20 10 0.30 10 0.20 20 3 0.40 0 0.30 10 0.40 10 4 0.20 -5 0.10 -10 0.20 0 0.10 -10 0.10 -20 5 REQUIRED: (a) Calculate the expected value of return for each of the three Projects and identify which project provides the largest expected return. (b) Calculate, and interpret, the standard deviation for each of the three Projects' returns and identify which project appears to have the greatest risk. (c) Calculate the coefficient of variation for each of the three Projects and identify which project appears to have the largest relative risk. (d) Given the calculations in part (c), which Project would you advise Lena to include in her portfolio and why? (e) Assume that Projects A, B, and C have betas of -1.0.8, and 2, respectively. If financial analysts expect the market portfolio return (i.e., ASX 200) to decrease by 10% due to the negative impact of COVID 19 in the 2021-2022 financial year, what would Project's A, B, and C's expected returns be? (1) Based on your findings in part (d), which one of these three Projects would you consider recommending to Lena and why