You have been given the following return? data,
Expected Return
Year Asset F Asset G Asset H
2018 18% 19% 16%
2019 19% 18% 17%
2020 20% 17% 18%
2021 21% 16% 19%
on three assets -F, G, and H—overthe period 2018–2021.
Using these assets, you have isolated three investment alternatives:
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
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?