Mojo ltd. is considering three possible capital projects for next year. Each project has a one-year life, and project returns depend on next years state of the economy. The estimated rates of return are shown below. STATE OF THEPROBABILITYRATE OF RETURN ECONOMY OF OCCURRENCE PWM Recession 0.25 11%10%15% Average 0.50 15%14%13% BOOM 0.25 17%19%10% REQUIRED: Find each project expected rate of return, variance, standard deviation and coefficient of variation. 7 marks Compute the correlation coefficient between P and W 3 marks P and M 3 marks W and M 3 marks Compute the expected return on a portfolio if the firm invests equal wealth on each asset. 3 marks Compute the standard deviation of the portfolio. 4 marks

Use the portfolio theory method as in Financial Management