Investment Mix Shares (%) Cash (%) Standard deviation (%) Growth 85 15 11.2 Balanced 70 30...

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Investment Mix Shares (%) Cash (%) Standard deviation (%) Growth 85 15 11.2 Balanced 70 30 9.6 Conservative 30 70 7.1 Cash 0 100 4.3 (a) If shares are expected to generate a return of 9% over the next year and cash is expected to generate a return of 3%, calculate the expected return for each pre-mixed investment option. (2 marks) (b) Using the returns you calculated in Part (a), calculate the coefficient of variation (CV) for each pre- mixed investment option. (1 mark) (c) which pre-mixed investment strategy is the least risk option using an absolute measure of risk (standard deviation) and which is the least risk option using a relative measure of risk (CV)? Do your answers differ? If yes, explain why. (2 marks) Investment Mix Shares (%) Cash (%) Standard deviation (%) Growth 85 15 11.2 Balanced 70 30 9.6 Conservative 30 70 7.1 Cash 0 100 4.3 (a) If shares are expected to generate a return of 9% over the next year and cash is expected to generate a return of 3%, calculate the expected return for each pre-mixed investment option. (2 marks) (b) Using the returns you calculated in Part (a), calculate the coefficient of variation (CV) for each pre- mixed investment option. (1 mark) (c) which pre-mixed investment strategy is the least risk option using an absolute measure of risk (standard deviation) and which is the least risk option using a relative measure of risk (CV)? Do your answers differ? If yes, explain why. (2 marks)

Answer rating: 100% (QA)

a To calculate the expected return for each premixed investment option we can use the ... View the full answer