Question

3. You have been given the expected return data shown in the first table on three assets—F, G, and H—over the period 2015-2018
Year	Asset F	Asset G	Asset H
2015	9	12	15
2016	8	9	16
2017	5	21	19
2018	13	6	11
Using these assets, you have isolated the three investment alternatives shown in the following table.
Alternative	Investment
1	100% of asset F
2	25% of asset F and 75% of asset G
3	50% of asset F and 50% of asset H
1. Calculate the expected return over the 4-year period for each of the three alternative
2. Calculate the standard deviation of returns over the 4-year period for each of the three alternatives.
3. Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives.
4. On the basis of your findings, which of the three investment alternatives do you recommend? Why?

Answer 1

Please find below details solution

3. You have been given the expected return data shown in the first table on three assets—F, G, and H—over the period 2015-2018
Year	Asset F	Asset G	Asset H	Variance F	Variance G	Variance H
2015	9	12	15	0.0625	0	0.0625
2016	8	9	16	0.5625	9	0.5625
2017	5	21	19	14.0625	81	14.0625
2018	13	6	11	18.0625	36	18.0625
Average	8.75	12	15.25
Varaince				32.75	126	32.75
Std deviation				3.304037934	6.480740698	3.304037934
Using these assets, you have isolated the three investment alternatives shown in the following table.
Alternative	Investment				Return
1	100% of asset F				8.75
2	25% of asset F and 75% of asset G				11.1875	summation of weightage*average return
3	50% of asset F and 50% of asset H				12	summation of weightage*average return
1. Calculate the expected return over the 4-year period for each of the three alternative
The average return'	F	G	H
	8.75	12	15.25
2. Calculate the standard deviation of returns over the 4-year period for each of the three alternatives.
Calculated above as Square root of (Variance/n-1)	F	G	H
Std deviation	3.304038	6.480741	3.304038
3. Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives.
	F&G	G&H	F&H
2015	0	0	-0.0625
2016	2.25	-2.25	-0.5625
2017	-33.75	33.75	-14.0625
2018	-25.5	25.5	-18.0625
Co-relation (return-mean return Assest1)* (return-mean return Assest2)	-19	19	-10.9167
Co-efficient of variation (Co-relation divide by std deviation of both assets)	-0.88733	0.887327	-1
4. On the basis of your findings, which of the three investment alternatives do you recommend? Why?
On basis on correlation F& H same so invest in any1 is fine

Answer 2

No answer i have