Question 2 Kamet is an investment fund that invests on the Ghana Stock Exchange. In recent times the economy has gone through four different cycles which analyst believe may be repeated in the years ahead. Kamet is reviewing its investment strategy and is looking for the best way to make good returns for its clients. The returns on three assets selected by Kamet are provided below: Business Cycle Normal Boom Near Recession Probability 0.30 0.40 0.10 ???? Unilever 40% 20% 20% 12% Starwin 40% 45% 30% 50% Anglogold 30% 40% 15% 30% Recession You are required to: i. Compute the expected return and risk of each asset and advise Kamet as to which asset to invest more funds in on the basis of: a) expected return on the assets b) riskiness of the assets (Hint: compute the coefficient of variation of each asset and select the asset with the lowest coefficient of variation; CV=- E(R)
Question 2 Kamet is an investment fund that invests on the Ghana Stock Exchange. In recent times the economy has gone through four different cycles which analyst believe may be repeated in the years ahead. Kamet is reviewing its investment strategy and is looking for the best way to make good returns for its clients. The returns on three assets selected by Kamet are provided below: Business Cycle Normal Boom Near Recession Probability 0.30 0.40 0.10 ???? Unilever 40% 20% 20% 12% Starwin 40% 45% 30% 50% Anglogold 30% 40% 15% 30% Recession You are required to: i. Compute the expected return and risk of each asset and advise Kamet as to which asset to invest more funds in on the basis of: a) expected return on the assets b) riskiness of the assets (Hint: compute the coefficient of variation of each asset and select the asset with the lowest coefficient of variation; CV=- E(R)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Question 2
Kamet is an investment fund that invests on the Ghana Stock Exchange. In recent times the
economy has gone through four different cycles which analyst believe may be repeated in the
years ahead. Kamet is reviewing its investment strategy and is looking for the best way to make
good returns for its clients. The returns on three assets selected by Kamet are provided below:
Business Cycle
Normal
Boom
Near Recession
Recession
You are required to:
Probability
0.30
0.40
0.10
????
Unilever
40%
20%
20%
12%
Starwin
40%
45%
30%
50%
Anglogold
30%
40%
15%
30%
i. Compute the expected return and risk of each asset and advise Kamet as to which
asset to invest more funds in on the basis of:
a) expected return on the assets
b)
riskiness of the assets (Hint: compute the coefficient of variation of each asset
and select the asset with the lowest coefficient of variation; CV=.
8
E(R)
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