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What is investment recommendation for someone

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Reference no: EM132473633

You have been provided the following data about the securities of three firms, the market portfolio, and the risk-free asset:

a. Fill in the missing values in the table.

Security Expected Return Standard Deviation Correlation* Beta

Firm A 0.10 0.31 ? 0.85

Firm B 0.14 ? 0.50 1.40

Firm C 0.16 0.65 0.35 ?

The market portfolio 0.12 0.20 ? ?

The risk-free asset 0.05 ? ? ?

b-1. What is the expected return of Firm A?

Expected return % =

b-2. What is your investment recommendation for someone with a well-diversified portfolio?

  • Buy
  • Sell

b-3. What is the expected return of Firm B?

Expected return % =

b-4. What is your investment recommendation for someone with a well-diversified portfolio?

  • Sell
  • Buy

b-5. What is the expected return of Firm C?

Expected return % =

b-6. What is your investment recommendation for someone with a well-diversified portfolio?

  • Sell
  • Buy

Reference no: EM132473633

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