Determine the expected rate of return

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Reference no: EM132406599

As a financial analyst at MBA Limited you are conducting an analysis of four alternative investment projects. Each project has a holding period of one year. The estimated rates of return for three alternative states of the economy are shown in the table below.

Rates of return if state occurs

State of the economy Probability A B C M

% % % %

Recession .20 10 6 22 5

Average .60 10 11 14 15

Boom .20 10 31 -4 25

Determine the expected rate of return, variance, standard deviation, and coefficient of variation for each project

Apply the mean-variance criterion to determine whether any of the alternative projects can be eliminated

Alternative M is broadly diversified mutual fund, so M can be used as a proxy for the market. Find beta for each alternative.

Reference no: EM132406599

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