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Calculate the expected rate

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Q1. Calculate the Expected Rate, Standard Deviation, Variance and Coefficient of variation and decide which of the following company is better for investment.

Possible outcomes

Probability

Rate of Return

Company G

Company H

Bullish Trend

0.25

20%

32%

Normal Trend

0.45

8%

5%

Bearish Trend

0.3

-6%

-6%

Q2. Consider a portfolio comprised of three securities in the following proportions and with the indicated security beta.

Security

Amount Invested

Beta

Expected return

A

$1.5 million

1.3

12.5%

B

$1.0 million

-0.1

8%

C

$2.0 million

0.6

9.8%

a. What is the portfolio's beta?

b. What is the portfolio's expected return?

Reference no: EM133098480

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