You have been given the expected return data in the

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Reference no: EM13483730 , Length: 15

Portfolio Analysis

You have been given the expected return data in the following table for three assets -F,G, and H- for four years.

Year	Asset F Expected Return	Asset G Expected Return	Asset H Expected Return
1	16%	17%	14%
2	17	16	15
3	18	15	16
4	19	14	17

For these three assets, you have isolated the three investment alternatives shown below:

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

The correlation coefficient of the returns between assets F and G is 0.25, and between F and H is -0.25.

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 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?

Reference no: EM13483730

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