Using EXCEL these assets, you have isolated the three investment alternatives shown in the following

table.

Alternative

Investment

a$.$ Calculate the expected return over the $4-$year period for each of the three alternative

b$.$ Calculate the standard deviation of returns over the $4-$year period for each of the three

alternatives.

c$.$ Use your findings in parts a and $b$ to calculate the coefficient of variation for each of

the three alternatives.

d$.$ On the basis of your findings, which of the three investment alternatives do you

recommend? Why?

Asset $Z$ has an expected return of $9\mathrm{.}5$ percent and a beta of $0\mathrm{.}85.$ If the risk$-$free rate is $2\mathrm{.}2$

percent, complete the following table for portfolios of Asset W and a risk$-$free asset.

Illustrate the relationship between portfolio expected return and portfolio beta by plotting

the expected returns against the betas. What is the slope of the line that results?

If you added more stocks at random to the portfolio, which of the following is the most

accurate statement of what would happen to ${}_p?$

a$.{}_p,$ would remain constant.

b$.{}_p$ would decline to somewhere in the vicinity of $20\%.$

c$.,{}_p$ would decline to zero if enough stocks were included