W6 Discussion Question 1: Risk and Return for Individual Securities and Portfolios EE Week 6 Discussion Question Worksheet: Risk and Return for Individual Securities and Purpose: To analyze the risk and return characteristics of various Portfolios investment alternatives The following table contains four potential investments along with their anticipated returns in Post: Use the data in the following worksheet & to answer the following various states of the economy and the associated probability of each outcome. questions. Answer each of the items below in your post. 1. Calculate the expected return, standard deviation, and coefficient of State of the Probability Treasury Kreators Biggie Car Part Equally Bills Holdings Weighted variation for Treasury Bills, Kreators Inc, Biggie Corp., Car Part Holdings. Economy Inc. Corp. Portfolio 2. Compare and contrast each of the four investments based upon their Recession 0.1 3% -30% -10% 25% risk and return characteristics. 3. If you create an equally weighted portfolio composed of these four Below Ave. 0.2 3% -15% -3% 12% investments, what would your expected return be for each state of the Average 03 3% 8% 5% 8% Economy? That is, if you create a portfolio that is 25% Treasury Bills, Above Ave 0.2 3% 22% 8% 6% 25% Kreators, 25% Biggie, and 25% Car Part Holdings, what return would you expect for each state of the economy? Boom 0.2 3% 40% 12% 3% 4. Calculate the expected return, standard deviation, and coefficient of variation for the equally weighted portfolio described in part 3. 5. If you wanted to reduce the standard deviation of the portfolio by removing one investment, which investment would you choose to remove? Why