1. As an investment analyst, you developed following expectations about stocks A and B. To enjoy diversification, you decided to invest your capital in A and B by 40-60 percent respectively.

Expected return

Year	Stock A	Stock B
2022	14%	20%
2023	14	18
2024	16	16
2025	17	14
2026	17	12
2027	19	10

Required:

1. Estimate expected return of portfolio for whole period of 2022-2027. (8 marks)
2. Estimate standard deviation of portfolio return over the whole period. (4 marks)
3. Estimate coefficient of variation for each alternative over whole period. (4 marks)

Based on your above answer, if you decide to invest in only one of above stocks, which alternative do you choose? Why? (2 marks)

Answer rating: 100% (QA)

Solution 5120 118 119 120 121 122 123 124 125 126 1 127 i 128 129 130 131 132 133 134 ... View the full answer