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You have been given the expected return data shown in the first table on three assets F, G, and H over the period 2016-2019. Expected

You have been given the expected return data shown in the first table on three assets F, G, and H over the period 2016-2019.

Expected Return

Year

Asset F

Asset G

Asset H

2016

16%

17%

14%

2017

17

16

15

2018

18

15

16

2019

19

14

17

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

Alternative

Investment

1

100% of asset F

2

50% of asset F and 50% of asset G

3

50% of asset F and 50% of asset H

a) Calculate the expected return over the 4-year period for each of the three alternatives.

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?

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