The expected return and risk involved in making an investment are important factors considered by investors. The expected return of a business can be influenced by many factors. Past performance is considered to reflect expected future performance and an equal probability of 25% is assumed for all returns. Based on the analysis of past returns and forecasting, the following information is available for returns on two shares
listed on the stock exchange:
|
Year
|
Mazebe
|
Baduna
|
|
2009
|
0.20
|
0.16
|
|
2010
|
0.28
|
0.12
|
|
2011
|
0.36
|
0.10
|
|
2012
|
0.12
|
0.18
|
Required:
1 Calculate the average return for each of the two shares.
2 Calculate the risk involved by use of the standard deviation of each of the two shares.
3 Calculate the co-efficient of variation of each of the two shares.