The following information relates to the forecast returns of securities A and B and their probabilities during the financial year ending 31ST December 2016:

Probability

0.2

0.1

0.35

0.05

0.15

0.15

Security A

10%

12%

8%

15%

14%

9%

Security B

8%

10%

7%

12%

11%

8%

Required:

(i) The expected returns on securities A and B

(ii) The standard deviation of securities A and B

(iii) Based on part (i) and (ii), which security would you recommend an investor to buy and why? (4 Marks)