1) Consultancy report has produced following assessment of countries:
EXPECTED RETURN POLITICAL RISK (%)
USA 42% 66
UK 36% 58
SOUTH AFRICA 56% 84
Political risk was measured by investigating main variables in applicable countries. These were social condition, corruption, changes in government, unfair cultures assets security and unfair trade. The countries are diverse and believed to be independent
a) Compute the risk, return and coefficient of variation of best possible combinations
b) Explain useful information computed can assist in making financial decisions
2) Investments A and B both offer the expected rate of return of= 12%. If standard deviation of A is 20% and that of B is 30%, then investors would:
3) Profitability Ratios PJ's Ice Cream Parlor has asked you to help piece together financial information on firm for most current year. Managers give you given information: sales = $50 million, total debt = $20 million, debt ratio = 50%, and ROE = 12%. By using this information, what is PJ's ROA?