QUESTION 1: Risk and Return

Given below are the expected returns of three possible investments in the next four years.

	Expected Returns
Year	Investment A	Investment B	Investment C
1	16%	17%	14%
2	17%	16%	15%
3	18%	15%	16%
4	19%	14%	17%

Portfolio Options:

Portfolio Option 1	50% of Investment A and 50% of Investment B
Portfolio Option 2	50% of Investment A and 50% of Investment C
Portfolio Option 3	50% of Investment B and 50% of Investment C

Using all the provided information, compute for the coefficient of variation of the three portfolio alternatives and which do you think is the best investment portfolio?

QUESTION 2: Interest Rates and Bond Valuation

Given below are information on five possible bond investments that pays interest on an annual basis. Compute for the Yield to Maturity of each bond and rank the following- 1 as the best priority investment option and 5 as the least priority investment option.

Bond	Par Value in $	Coupon Interest Rates in %	Years to Maturity	Current Value in $	Yield to Maturity	Rank
A	1,000.00	9	8	820
B	1,000.00	12	16	1,000.00
C	500.00	12	12	560.00
D	1,000.00	15	10	1,120.00
E	1,000.00	5	3	900.00