you have been given the expected return data shown in the first table on three assetslong dash—?F, ?G,...

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Finance

you have been given the expected return data shown in the firsttable on three
assetslong dash—?F,
?G, and
H long dash—over
the period? 2016-2019:
Expected Return
Year
Asset F
Asset G
Asset H
2016
16?%
17?%
???
14?%
???
2017
17?%
16?%
15?%
2018
18?%
15?%
16?%
2019
19?%
14?%
17?%
Using these? assets, you have isolated the three investmentalternatives 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
Calculate the expected return over the? 4-year period for eachof the three alternatives. ?

Answer & Explanation Solved by verified expert

4.2 Ratings (792 Votes)

	Alternative 1
	?100% of asset F
	Year	Asset F
1	2016	16
2	2017	17
3	2018	18
4	2019	19
		=SUM(C24:C27)
		70
	Average expected Return=			Total Expected Return/ No. of Years
				17.50


	Alternative 2

	Year	Asset G
	2016	17
	2017	16
	2018	15
	2019	14
		=SUM(C37:C40)
		62
	Average expected Return=			Total Expected Return/ No. of Years
				15.50

	Expected Return in Aternative 2
			= Avg. Expected Return of F* weights of F + Avg. Expected Return of G* weights of G
			16.50

	Alternative 3

	Year	Asset H
	2016	14
	2017	15
	2018	16
	2019	17
		=SUM(C53:C56)
		62
	Average expected Return=			Total Expected Return/ No. of Years
				15.50

	Expected Return in Aternative 3
			= Avg. Expected Return of H* weights of H + Avg. Expected Return of G* weights of G
			15.50

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Transcribed Image Text

you have been given the expected return data shown in the firsttable on threeassetslong dash—?F,?G, andH long dash—overthe period? 2016-2019:Expected ReturnYearAsset FAsset GAsset H201616?%17?%???14?%???201717?%16?%15?%201818?%15?%16?%201919?%14?%17?%Using these? assets, you have isolated the three investmentalternatives shown in the following? tableAlternativeInvestment1?100% of asset F2?50% of asset F and? 50% of asset G3?50% of asset F and? 50% of asset HCalculate the expected return over the? 4-year period for eachof the three alternatives. ?

	Expected Return
Year	Asset F	Asset G		Asset H
2016	16?%	17?%	???	14?%	???
2017	17?%	16?%		15?%
2018	18?%	15?%		16?%
2019	19?%	14?%		17?%

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