1. Calculate the expected return on an asset that has the following probable

returns:

Order Return (%) Probability

1 634 .39

2 814 .27

3 912 .19

4 7% . 09

5 4% . 06

2. If you compare the asset in Exercise 1 to the following asset, can you quickly

tell which one is riskier?

Order Return (%) Probability

1 9% .29

2 10% .25

3 612% .22

4 5% .15

5 4% .09

3. If these two assets are in the same portfolio, would that be better or worse for the portfolio return? Can you tell by a quick examination, and how?

4. Calculate the standard deviation of the two assets in Exercises 1 and 2 and explain how you can use the standard deviation to tell which asset is riskier.

5. Calculate the coefficient of variation of the two assets in Exercises 1 and 2

and explain which asset is riskier, and why.

6. Calculate the portfolio return of the following five-asset portfolio and how

they are making up the portfolio capital.

Asset Return (%) Asset % of Portfolio

A 14% .25

B 1312% .20

C 12% .15

D 914% .26

E 10% .14

7. Calculate the portfolio return for a business whose market value went up from $720000 in 2010 to $985000 in 2011.

returns:

Order Return (%) Probability

1 634 .39

2 814 .27

3 912 .19

4 7% . 09

5 4% . 06

2. If you compare the asset in Exercise 1 to the following asset, can you quickly

tell which one is riskier?

Order Return (%) Probability

1 9% .29

2 10% .25

3 612% .22

4 5% .15

5 4% .09

3. If these two assets are in the same portfolio, would that be better or worse for the portfolio return? Can you tell by a quick examination, and how?

4. Calculate the standard deviation of the two assets in Exercises 1 and 2 and explain how you can use the standard deviation to tell which asset is riskier.

5. Calculate the coefficient of variation of the two assets in Exercises 1 and 2

and explain which asset is riskier, and why.

6. Calculate the portfolio return of the following five-asset portfolio and how

they are making up the portfolio capital.

Asset Return (%) Asset % of Portfolio

A 14% .25

B 1312% .20

C 12% .15

D 914% .26

E 10% .14

7. Calculate the portfolio return for a business whose market value went up from $720000 in 2010 to $985000 in 2011.