Question
You have been given the following return data on three assetslong dashF, G, and H long dashover the period 2018minus2021 (Click on the icon located
You have been given the following return data on three
assetslong dashF, G, and H long dashover the period 2018minus2021
(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
Expected Return (%) |
| |||
Year | Asset F | Asset G | Asset H | |
2018 | 15 | 17 | 14 | |
2019 | 16 | 16 | 15 | |
2020 | 17 | 15 | 16 | |
2021 | 18 | 14 | 17 |
Using these assets, you have isolated three investment alternatives:
Alternative | Investment |
|
1 | 100 % of asset F | |
2 | 55 % of asset F and 45 % of asset G | |
3 | 55 % of asset F and 45 %of asset H |
a. Calculate the portfolio 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. On the basis of your findings in parts(a)and(b), which of the three investment alternatives would you recommend? Why?
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