As a Assistant Financial Analyst, you are required to help your manager in order to prepare...

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As a Assistant Financial Analyst, you are required to help your manager in order to prepare with the evaluation of risk and return for two (2) of securities investment. By considering four economic conditions, the cash flow or return may be varying. Below are the tables of cash flow for each quarter state of economic condition with the probability. State of Economy Required:- Rapid Growth Normal Recession Probability 35% 50% 15% Return on Stock LT 15.5% 10% 8.6% a) Find the expected return for this investment of securities. b) Estimate the variance for this investment of securities. Return on Stock PR 12.3% 9.8% 8.0% (10 marks) (10 marks) c) Measure the standard deviation of this investment securities, and suggest to your top management the most worth securities to invest with justification to support your suggestion. (5 marks) As a Assistant Financial Analyst, you are required to help your manager in order to prepare with the evaluation of risk and return for two (2) of securities investment. By considering four economic conditions, the cash flow or return may be varying. Below are the tables of cash flow for each quarter state of economic condition with the probability. State of Economy Required:- Rapid Growth Normal Recession Probability 35% 50% 15% Return on Stock LT 15.5% 10% 8.6% a) Find the expected return for this investment of securities. b) Estimate the variance for this investment of securities. Return on Stock PR 12.3% 9.8% 8.0% (10 marks) (10 marks) c) Measure the standard deviation of this investment securities, and suggest to your top management the most worth securities to invest with justification to support your suggestion. (5 marks)

Answer rating: 100% (QA)

Answer a Expected Return The expected return for this investment can be calculated using the formula Expected Return Cash Flow x Probability For the first security the expected return is Expected Retu... View the full answer