Question: Expected Return & Risk: Population Expected Value You are considering the purchase of two securities. They have the following scenario analysis: Probability Asset 1 Asset

  1. Expected Return & Risk: Population Expected Value

You are considering the purchase of two securities. They have the following scenario analysis:

Probability

Asset 1

Asset 2

Recession

0.3

-3%

-20%

Normal Growth

0.4

10%

15%

Boom

0.3

15%

30%

  1. What is the expected returns for Asset 1 and Asset 2?
  2. What are the population variances?
  3. What are the coefficient of variations for Asset 1 and Asset 2?
  4. Reward-to risk returns for Asset 1 and Asset 2? Assume the risk-free rate is 4%.

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