P8-14 Portfolio analysis You have been given the expected return data shown in the first table on three assets-F, G, and H-over the period 2016-2019. Expected return Year Asset F Asset G Asset H 2016 16% 17% 14% 2017 17 16 15 2018 18 15 16 2019 19 14 17 Using these assets, you have isolated the three investment alternatives shown in the following table. Alternative Investment 1 100% of asset F 50% of asset F and 50% of asset G 3 50% of asset F and 50% of asset H 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 parts 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?

P8-14 Portfolio analysis You have been given the expected return data shown in the first table on three assets-F, G, and H-over the period 2016-2019. Expected return Year Asset F Asset G Asset H 2016 16% 17% 14% 2017 17 16 15 2018 18 15 16 2019 19 14 17 Using these assets, you have isolated the three investment alternatives shown in the following table. Alternative Investment 1 100% of asset F 50% of asset F and 50% of asset G 3 50% of asset F and 50% of asset H 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 parts 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?

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter13: Investment Fundamentals

Section: Chapter Questions

Problem 2LTAI

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