You are considering investing in Barr Ltd. Barr Ltd. has the following profitability range using Portfolio...

 

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You are considering investing in Barr Ltd. Barr Ltd. has the following profitability range using Portfolio Theory: Economy Probability Return % Good 0.1 20 Average 0.4 16 Bad 0.3 10 Worse 0.2 3 Page 4 of 6 It has a standard deviation of 5.5 as a measurement of its risk. You are required to assess its investment potential comparing the results with two other investments in Collins and Daniels. Their performance is as follows:- Collins Daniels 15% 5% Expected Return 20% Expected Risk 10% You are required to:- a) Calculate the expected return (F) of Barr Ltd. (8 marks) b) Using Utility Theory measure the performance of your three chosen companies. (8 marks) c) Plot the results on a risk and return graph. (7 marks) d) Comment on the results. You are considering investing in Barr Ltd. Barr Ltd. has the following profitability range using Portfolio Theory: Economy Probability Return % Good 0.1 20 Average 0.4 16 Bad 0.3 10 Worse 0.2 3 Page 4 of 6 It has a standard deviation of 5.5 as a measurement of its risk. You are required to assess its investment potential comparing the results with two other investments in Collins and Daniels. Their performance is as follows:- Collins Daniels 15% 5% Expected Return 20% Expected Risk 10% You are required to:- a) Calculate the expected return (F) of Barr Ltd. (8 marks) b) Using Utility Theory measure the performance of your three chosen companies. (8 marks) c) Plot the results on a risk and return graph. (7 marks) d) Comment on the results.

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