FIN2601 ASSIGNMENT 2 OF 2022 COMPARATIVE ANSWERS AND WORKINGS

What is an investment’s expected return if the following probable returns are expected?
Outcome Probability Return
Strong economy 0,60 35%
Normal economy 0,25 15%
Weak economy 0,15 7%




a. 0,45%
b. 11,53%
c. 25,80%
d.132,96%



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Question 2
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Africa Demolition Contractor had the following returns over the last three years:
Year Return
2021 35%
2020 28%
2019 –10%


What is the coefficient of variation of the company’s returns?




a.
0,73




b.
1,37




Classified as Internal use only

, c.
24,21




d.
33,18



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Question 3
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Douglasdale Dairy Farm is evaluating the introduction of a new product. The possible levels
of unit sales and the probabilities of their occurrence are given below.
Possible market reaction Sales in units Probabilities
Low response 15 15%
Moderate response 55 20%
High response 75 32%
Very high response 85 33%


You are required to calculate the standard deviation.




a. 0,36%



b. 23,64%



c. 65,30%
d.558,91%



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Question 4




Classified as Internal use only