Question 3(Chapter 4,RiskandRequiredRateofReturn) (11Marks)

For every entity, investing in a right security/asset is considered a crucial task. Given the persisting global economiccrisis, majority of entities are resorting to a new normal especially those within the supply chain management space.Supposeyourorganizationiscontemplatingtoinvestin oneofthefollowingmutuallyexclusivesecurities:

	Expectedreturns
Stateoftheeconomy	Probability	SecurityX	SecurityX
Normal	40%	12%	7%
Boom	50%	10%	8%
Recession	10%	-2%	-1%

Required:Carefully,answerthefollowingquestions:	Marks
3.1.	Basedontheexpectedreturn,which securitywouldyourecommendtoyourorganization?	4
3.2.	Basedonthestandarddeviation,whichsecuritywouldyourecommendtoyourorganization?	4
2.3.	Givenyouranswersin(3.1)and(3.2),whichonewouldyourecommendtoyourorganizationas afinalbasisofitsinvestmentchoice?	3