a) Batu Kawi and FGB Berhad are operated in the same industry. The table below shows the monthly prices of these two corporations for seven

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a) Batu Kawi and FGB Berhad are operated in the same industry. The table below shows the monthly prices of these two corporations for seven months period (from December 2019 to June 2020). The average returns and standard deviation for BENCHMARK Index of the industry are 1.244% and 4.433% respectively.

Month Batu Kawi Berhad FGB Berhad

December 2019 $40.50 $74.75

January 2020 $42.73 $76.54

February 2020 $45.81 $76.28

March 2020 $44.92 $76.53

April 2020 $40.26 $76.91

May 2020 $42.06 $77.77

June 2020 $45.84 $80.12

You are required to:

i) Calculate the expected return for Batu Kawi and FGB Berhad.

ii) Calculate the standard deviation for Batu Kawi and FGB Berhad.

iii) Compare the expected return and standard deviation of the BENCHMARK Index and your answers above and provide your comment.

b) Assume that of your $10,000 portfolio, you invest $7,500 in Stock X and $2,500 in Stock Y. Calculate the expected return and the standard deviation of returns on your portfolio using the information given in the table below:

Stock X Stock Y

Expected return 20% 16%

Standard deviation 24.33% 16.09%

Coefficient of variation 0.46