State Probability R_A R_M

1 10% 16% 10%

2 40% 7% 18%

3 40% 12% -5%

4 10% -8% 9%

1. Calculate the expected returns on security A and the market.

2. Calculate the variances and the standard deviations of security A and the market.

3. Calculate the coefficient of variations (CV) for security A and the market. Does A initially seem to be more or less attractive than a market portfolio? Why? What other consideration might affect your answer and how?