Part B Probability Distribution Two portfolios, X & Y, are currently being considered by a financial planner. The probab

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Part B Probability Distribution Two Portfolios X Y Are Currently Being Considered By A Financial Planner The Probab 1 (80.64 KiB) Viewed 18 times

Part B Probability Distribution Two portfolios, X & Y, are currently being considered by a financial planner. The probability distributions of expected return for these assets are shown in the following table: Assets A B C D E Note: Portfolio X Return% 14 -8 0 -14 17 Amount invested $2500 $3500 $1500 $2700 $3400 Portfolio Y Return% 10 9 -12 7 19 Coefficient of variation = CV = E(X) / SD Sharpe Ratio=[ E(X) - RF ] / SD Pr Required 1. Calculate the expected return of Portfolio X & Y. Which asset has the highest return? 0.40 0.25 0.20 0.10 0.5 2. Calculate the variance and standard deviation [SD] for each of the asset's return. Which one appears to have highest risk? 3. Calculate the coefficient of variation for each portfolio.. 4. If risk free risk is 2.5 % calculate the Sharpe ratio. 5. Put all the results calculated above on a table .Which one will you choose and why?