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

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Accounting

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

assets F,G, and H over the period 2016-2019:

F G H
2016 19% 20% 17%
2017 20% 19% 18%
2018 21% 18% 19%
2019 22% 17% 20%

Using these assets, you have isolated the three 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 three alternatives.

b.Calculate the standard deviation of returns over the 4-year period for each of the three alternatives.

c.Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives.

d.On the basis of your findings, which of the three investment alternatives do you recommend? Why?

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