You have been given the expected return data shown in ht first table on three as

Question

You have been given the expected return data shown in ht first table on three assets F, G and H over the period of 2013-2016: Expected Return Year Asset F Asset G Asset H 2013 17% 18% 15% 2014 18% 17% 16% 2015 19% 16% 17% 2016 20% 15% 18% a) Calculate the expected return over the 4 yr period for each three alternatives, b) calcualte the standard deviation of returns over the 4 yr period for each of the three alternatives c) use findings in parts a and b to calcualte the coefficient of variation for each of the three alternatives, d) on teh absis of your findings which of the three investment altrnatives do you recommend, why?

Explanation / Answer

a) expected return of F= 18.5% expected return of G= 16.5% expected return of H= 16.5% b)standard deviation of F= 1.118 standard deviation og G= 1.118 standard deviation of H= 1.118 c) coefficient of variation of F= 6.04% coefficient of variation of G= 6.776% coefficient of variation of H= 6.776% d) we would recommend Asset F, since its coefficient of variation is the least, therefore it is least risky..

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