Question
You have been asked for your advice in selecting an asset for investment purpose. There are three assets - X, Y and Z- are currently
You have been asked for your advice in selecting an asset for investment purpose. There are three assets - X, Y and Z- are currently being considered. The probability distributions of expected returns for these assets are shown in the following table. Asset X Asset Y Asset Z Pi Return Pi Return Pi Return 0.1 40% 0.4 35% 0.1 40% 0.2 10 0.3 10 0.2 20 0.4 0 0.3 -20 0.4 10 0.2 -5 0.2 0 0.1 -10 0.1 -20 Required: i. Which asset you would recommend if investor concerned with expected return? ii. Which asset you would recommend if investor concerned with risk? iii. Which asset you would recommend if investor concerned with relative risk?
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