You have been given the expected return data shown in the first table on 3 assets- F, G and H over the period 2016-2019.
Expected Return
Year Asset F Asset G Asset H
2016 10% 11% 8%
2017 11 10 9
2018 12 9 10
2019 13 8 11
Using the assets you have isolated and the 3 investment alternatives shown in the following table:
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
a. Calculate the expected return over the 4 year period for each of the alternatives.
b. Calculate the standard deviation of returns over the four year period for each of the alternatives.
c. Use your findings in parts a and b to calculate the coefficient of variation for each of the 3 alternatives.
d. On the basis of your findings, which of the three investment alternatives do you recommend? Why?