Question The management of Triumphant plc is evaluating 2 projects whose returns depend on the future state of the economy as shown in the following table: Probability IRR4(%) IRRB(%) 0.3 27 35 0.4 18 15 0.3 5 20 The project (or projects) accepted would double the size of Triumphant. Required: Explain how a portfolio should be constructed to produce an expected return of 20%. (12 marks) (b) Chong Berhad's ordinary shares have an expected return of 25% and a coefficient of variation of 2.0. What is the variance of Chong Berhad's ordinary shares returns? (3 marks) Ah Kau is watching an old game show on rerun television called Let's Make a Deal in which you have to choose a prize behind one of two curtains. One of the curtains will yield a gag prize worth $150 and the other will give a car worth $7,200. The game show has placed a subliminal message on the curtain containing the gag prize, which makes the probability of choosing the gag prize equal to 75%. What is the expected value of the selection and what is the standard deviation of that selection? (4 marks) Shares A, B and C have expected returns of 15%, 15% and 12%, respectively, while their standard deviations are 45%, 30% and 30%, respectively. If you were considering the purchase of each of these shares as the only holding in your portfolio, then which share should you choose? (6 marks) [Total : 25 marks)