Portfolio analysis You have been given the expected return data shown in the first table on three assets—F, G, and H—over the period 2016–2019.

Expected return

Year Asset F Asset G Asset H

2016 16% 17% 14%

2017 17 16 15

2018 18 15 16

2019 19 14 17

Alternative Investment

1 100% of asset F

2 50% of asset F and 50% of asset G

3 50% of asset F and 50% of asset H

Asset

Expected

return, r

Risk (standard

deviation), sr

V 8% 5%

W 13 10

Using these assets, you have isolated the three investment alternatives shown in the following table.

a. Calculate the expected 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. Use your findings in parts a and b to calculate the coefficient of variation for each of the three alternatives.

d. On the basis of your findings, which of the three investment alternatives do you recommend? Why?