A. Andrian has just graduated from local university last year. Currently, he plans to start invest in stocks. He had already prepared his investment portfolio that consists of a group of securities listed in Kuala Lumpur Exchange. The information related to the expected return and beta for each security is provided below: Securities BI BM BE BN Percentage (%) Expected Return Securities' Beta 40 18% 0.35 20 25% 1.89 15 10% 2.07 25 20% 0.88 The market risk premium is 7% while the real rate of return is 4% and inflation premium is 2.1%. Required: a. Calculate the: i. Portfolio's expected return. (4 marks) ii. Portfolio's average beta (B). (4 marks) iii. Required rate of return for each individual stock. (4 marks) iv. Portfolio's required rate of return. (1 mark) b. Should Andrian review his investment portfolio? Justify. (1 mark) B. a. Haiqal is confirmed to receive 12 years from now RM7,000. He wishes to sell this future amount to Hariz. How much Hariz can afford to pay if he intends to earn 10% per year over the next 12 years? (3 marks) b. Norman was asked what he would pay for an investment that offered RM900 a year for the next 20 years. He required a 10% return to make that investment. What should he bid? (3 marks) 2 CONFIDENTIAL