(20 Marks) 1. Assume you have $1 million Cash and are trying to choose among three securities to invest. a. Security A is a price weighted index of the following three stocks with the corresponding price information in period 0 and period 1 (assume the initial index divisor is 3): Stock A12 A22 A32 Initial date (t=0 Price Shares Outstanding $200 100 $30 5002 $40 6004 Final Date (t=1) Expected Price $25 $30 $444 1. 1. 1. 1. b. Security B is a value weighted index of the following three stocks with the corresponding price information in period 0 and period 1 ((assume the initial index divisor is 100):- Stock Ble B2 B32 Initial date (t=0) Price Shares Outstanding $50 800 $60 500 $702 600 Final Date (t=1) Expected Price $100 $80 $60 1. T. 1. 1. 1. c. Security C is a single security with the following expectations: State of the Market Probability Final Date (t=1) Ending Price Holding Period Return (Including dividends; From t=0 to t=1) 25% Boom Normal Recession 0.42 0.42 0.22 $2002 $1804 $150 %10 -15% Given the above choices, calculate and answer:- i). What is the single period expected return for Security A & Security B, respectively? (6 Marks ii). What is the single period expected return for Security A if stocks Al and A2 were to split 2 for 1 and 4 for 1, respectively, after period 0? (5 Marks) 2 2 4 iii). What is the mean and standard deviation of the holding period return for Security C?(5 Marks) iv). With your $1 million cash, if you decided to invest $300,000 in Security A, $400,000 in Security B, and the remaining amount in Security C, what is your single period expected return for your portfolio, without considering the stock splits in question ii)? (4 marks) & e