The following information pertains to Al Jazeera Steel stock.

Economic state Probability Return

Prosperous 20% 40%

Standard 60% 15%

Decline 20% (20%)

Instructions:

Calculate Al Jazeeras expected return and risk.

If investment in Oman Cables is expected to have a return of 10% and calculated risk of 4.5%, which company would be a better investment opportunity; Al Jazeera Steel or Oman Cables?