Required:a. Calculate the standard deviation of returns of each service provider.b. Which service provider would you recommend for Mr. Lutombi to invest in?c. Assuming Mr. Lutombi invests 40% of his money in MTC and the rest in Telecom, what is Mr. Lutombi portfolio return? Question 3Mr. Lutombi, aged 55 years old, is the current Roads Authority (RA) CEO. He iscontemplating an early retirement and plans to invest his terminal benefits in MobileTelecommunication Company (MTC) Namibia (MTC) and separate TELECOM Namibia(TELECOM) STOCK. Telecom is 100% government owned and was established in 1992as a commercial subsidiary company of Namibia Post and Telecom Holdings Limited.TELECOM is serving more than 396 000 (fixed and mobile) customers, with 986employees and annual revenue of more than N$ 1.5 Billion. MTC was established in 1994and is mainly into mobile cellular business with over two million active subscribers andhas a staff compliment of 421.The following information relates to the two companies:State of the economyMTCProbability of stateof economyLikely returns givenstate of economyBoom5010%Depression2012%Recession?2%Assuming: The market return is 12%, standard deviation of expected market return is6%.TelecomLikely returns given stateof economy22%(2%)15%

In finance we use standard deviation as a measure of risk. Now standard deviation of returns is a…

Required: a. Calculate the standard deviation of returns of each service provider. b. Which service provider would you recommend for Mr. Lutombi to invest in? c. Assuming Mr. Lutombi invests 40% of his money in MTC and the rest in Telecom, what is Mr. Lutombi portfolio return?

Required: a. Calculate the standard deviation of returns of each service provider. b. Which service provider would you recommend for Mr. Lutombi to invest in? c. Assuming Mr. Lutombi invests 40% of his money in MTC and the rest in Telecom, what is Mr. Lutombi portfolio return?

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter3: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 46P

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