Question 4 A group of five friends decided to each contribute
Question 4 A group of five friends decided to each contribute R2 000 to an investment pool and then toinvest the total amount in the pool in one of two shares recommended to them by an investmentanalyst. The group members consider themselves to be rational investors. The recommendedshares are shares in Industrial Engineering Lid and Skytech Aviation (Pty) Ltd.Skytech offers a return of 15% with a standard deviation of 6%.The group needs to determine the expected return and risk for Industrial Engineering’s sharesbased on the following information:Business climateProbabilityReturnPessimistic32%9%Fair45%12%Optimistic23%16%Required:4.1 .Calculate the expected return and risk for Industrial Engineering’s shares. Show andround off all calculations to two decimals.(9)4.2.Which share should the group invest in? Provide reasons for your recommendation.Show and round off all calculations to two decimals.(16)SBSPage 7 of Assignment
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