The Following Scenario is in the stock Market.

The probability that a financial market will undergo four economic scenarios is: Good 0.55, Bad 0.15, Fair 0.15, Best 0.15.
Three companies exist in different sectors of the economy:
Samear Africa in Manufacturing with returns of 3%, (5%),1.5%, 5% in the order of economic scenarios listed above.
KCB in the banking sector with returns of 10%, 4%,5% 11%
In the Commercial & services sector the returns of Safaricom are: 10%,10%,10%,10%.
Required:

You wish to acquire 50% Safaricom, 25% KCB and 25% Sameer Africa. What will be the outcome in expected returns and Risk    
Your investment advisor insists that you have a wrong portfolio! How can you prove this?

Answer rating: 100% (QA)

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