Question 3

Ravi, a fund manager working for a private equity firm headquartered in Singapore, is considering including the following stocks in the firm's portfolio:

31'0me Shoot Pm Suck 381' Stock m Stock BAH Economy 25% Boom 0% 20% 40% 40% Norm] 6% 12% I 5% 35% Recession 15% 4% 4.6% Year Project Sumo Project Steel 1 80,000 160,000 2 95,000 160,000 3 80,000 160,000 4 73,000 160,000 5 (60,000) (520,000) The initial investment for Project Sumo and Project Steel is $200,000 and $170,000