Stand alone

Question $1$

Bawang Puteh Inc. is considering an investment in one of two common shares. The common

shares' possible returns $($k$)$ and probability distribution$($p$)$ are as follows:

From the above information you are required to:

a$.$ Calculate the expected rate of return for each common share.

b$.$ Calculate the standard deviation for each common share.

c$.$ Calculate the coefficient of variation for each common share.

d$.$ Which investment is better? Explain your answer based on your calculation in part a to c$.$

Question $2$

From the above information you are required to:

i$.$ Calculate the standard deviation for each company.

ii$.$ Calculate the coefficient of variation for each company.

iii. From your answer in part $($i$)$ and $($ii$)$ which company is considered riskier? Explain your

answer.

Question $3$

The following information given below is the probability distribution of returns for Paragon Bhd$.$

and Talam Bhd$.$

For each stock, calculate:

a$.$ the expected return

b$.$ the standard deviation

c$.$ the coefficient of variation

d$.$ based on your answer in part $($a$)$ to $($c$)$ which stock will you invest?