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Good day FCIS have been observing the performance of three assets for some time now,...

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Accounting

Good day

FCIS have been observing the performance of three assets for some time now, and have forecasted the following expected returns for the following three assets and asked you to make a determination on the best option for Mr. Welch.

Year

Expected Return

Asset A

Asset B

Asset C

2017

16.00

17.00

14.00

2018

17.00

16.00

15.00

2019

18.00

15.00

16.00

2020

19.00

14.00

17.00

You have explored three options for Mr. Welsh which include:

(a) full 100 percent investment in Asset A,

(b) 50 percent in asset A and 50 percent in asset B,

(c) a 50 percent in asset A and 50 percent in asset C.

B. Given the above investment options, and the forecasted information, you were asked to determine the expected returns, standard deviation of returns and coefficient of variation of returns for each of the three options and provide your Manager with a recommendation for investment for Mr. Welsh. You must also provide the workings as part of your report and comment on the correlation for options AB and AC.

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