Question: You have been given the following return data, Expected Return Year Asset F Asset G Asset H 2018 17% 16% 13% 2019 18% 15% 14%
You have been given the following return data,
| Expected Return | |||
| Year | Asset F | Asset G | Asset H |
| 2018 | 17% | 16% | 13% |
| 2019 | 18% | 15% | 14% |
| 2020 | 19% | 14% | 15% |
| 2021 | 20% | 13% | 16% |
| Alternative | Investment | |||
| 1 | 100% | of asset F | ||
| 2 | 55% | of asset F and | 45% | of asset G |
| 3 | 55% | of asset F and | 45% | of asset H |
F, G, and H over the period 2018 2021. Using these assets, you have isolated three investment alternatives:
a. Calculate the portfolio return over the 4-year period for each of the three alternatives. b. Calculate the standard deviation of returns over the 4-year period for each of the three alternatives. c. On the basis of your findings in parts a and b, which of the three investment alternatives would you recommend? Why?
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