QUESTION TWO (a) One of the techniques used in Divisional Performance Evaluation is ROI. Giving relevant examples, explain the distinct advantages of ROI system and the problems/limitations of the ROI system. (10 marks) (b) The returns of two assets under four possible states of nature are given below: State of nature Probability Return on asset 1 Return on asset 2 P 0, 10 5% 0% N 0,30 10% 8% w 0,50 15% 18% 4 0,10 20% 26% Calculate the standard deviation of the return on asset 1 and asset 2 ii . Determine the covariance between the returns on assets 1 and 2. iii . What is the coefficient of correlation between the returns on assets 1 and 2? (10 marks) DUE DATE : 27 MAY 2022 W