China Development Industrial Bank

China training industrial Bank Integrated Case Risk and Return Assume that you latterly graduated with a major in finance. You just landed a job as a financial planner with China Development Industrial bank (CDIB), a large financial services corporation. Your front assignment is to invest $100,000 for a client. Because the funds to be invested in a business at the end of 1 year, you hurl been instructed to plan a 1-year holding period. Further, your boss has restricted you to the investment alternatives in the following table, shown ith their probabilities and associated outcomes.RETURNS ON ALTERNATIVE INVESTMENTS ESTIMATED RATE OF RETURN State Of the Economy Probability T-bills blue Tech Collections U. S. natural rubber Market Portfolio 2-stock-portfolio Recession 0. 1 5. 5% -27. 0% 27% 6% -17% 0% Below Average 0. 2 5. 5% -7% 13% -14% -3% Average 0. 4 5. 5% 15% 0 3% 10% 7. 50% Above Average 0. 2 5. 5% 30% -11% 41% 25% Boom 0. 1 5. 5% 45% -21% 26% 38% 12% r(hat) expected retur n 1. 00% 9. 80% 10. 50% ? (std deviation) 0. 0% 13. 20% 18. 80% 15. 20% 3. 40% CV 13. 20% 1. 90% 1. 4% 0. 50% beta -0. 87% 88. 00%CDIBs economic omen staff has developed probability prefigures for the state of the economy and its security analysts have developed a sophisticated computer program, which as used to estimate the rate of return on apiece alternative under each state of the economy. High Tech Inc. is an electronics firm, collection Inc. collects past due debts, and U. S. Rubber manufactures tires and various other rubber and plastic products. a. (1)Why is the T-bills return strong-minded of the state of the economy? Do T-bills promise a completely safe return? Explain. The estimated rate of return on T-bill which is 5. 5% does not take care on