a) The data presented below represents the expected returns on a financial asset in different seasons of the year. Season of year Probability Returns Spring Summer Winter i) What is the expected return on the asset? marks) ii) What is the standard deviation on the asset? marks) iii) What is the covariance of the asset? (2 marks) iv) What is meant by Diversification and it effect on risk and return on a portfolio? (3marks) Asset B 40% 35% 25% 7.9% 2% 6% 10% 4.6% b) You are given the following data about Asset A and Asset B. Expected returns Standard Deviation Asset A or Asset B, explain which asset 8.6% (4 3.8% (6 Assuming that an investor is to choose between Asset A a rational investor will choose. (3 marks) c) With the use of a diagram, explain why an investor will always choose a point on the SML line. (7marks)

a financial asset in different seasons of the year. i) What is the expected return on the asset? \\( (4 \\) marks) ii) What is the standard deviation on the asset? (6 marks) iii) What is the covariance of the asset? (2 marks) iv) What is meant by Diversification and it effect on risk and return on a portfolio? (3marks) b) You are given the following data about Asset A and Asset B. Assuming that an investor is to choose between Asset A or Asset B, explain which asset a rational investor will choose. ( 3 marks) c) With the use of a diagram, explain why an investor will always choose a point on the SML line. (7marks)