A portfolio management company plans to invest in common shares of a company specializing in the manufacture of microcomputers. however, various performance are possible and are divided according to the following table, within a one-year period.

performance (%) 30     28.5      21       15        10      6

probability         0.06     0.20     0.35    0.24   0.10    0.05

a) Calculate the expected performance on such an investment.

b) Calculate the standard deviation and the coefficient of variation of this performance

c) A company could also invest in government bonds with a guaranteed performance of 14%. calculate the coefficient of variation.

(d) Which of the two investments presents the highest risk?

Answer rating: 100% (QA)

a To calculate the expected performance we multiply each performance outcome by its corresponding pr... View the full answer