a. C. d. e. The following data have been developed for a listed company, Happy Cat. Happy Cat's Return 0.06 -0.04 0.12 0.01 0.25 f. Year 2018 2019 2020 2021 2022 Market's Return b. Find the sample covariance between the return for Happy Cat and the market. Show your calculations. Correct your answers to 6 decimal places. [4 marks] Calculate the beta of Happy Cat. Show your calculations. [2 marks] Use the CAPM to find the required rate of return of Happy Cat. [3 marks] If Happy Cat distributes $2 annual dividend in one year and the annual dividend is assumed to grow at 4% per year indefinitely, find the fair stock price of Happy Cat now. Show your workings. [3 marks] 0.1 0 0.16 -0.06 0.15 The YTM on risk-free Treasury Bills is 4% and is expected to remain at this point for the foreseeable future. Calculate the sample variance of the market return. Show your calculations. Correct your answers to 4 decimal places. [4 marks] Suppose Steven buys 5,000 shares of Happy Cat at the fair stock price now. If the market drops by 1.5% in one month, estimate the dollar amount of capital gain or loss for his investment in one month. Explain your answer. [4 marks]

1. The following data have been developed for a listed company, Happy Cat. The YTM on risk-free Treasury Bills is 4% and is expected to remain at this point for the foreseeable future. a. Calculate the sample variance of the market return. Show your calculations. Correct your answers to 4 decimal places. [4 marks] b. Find the sample covariance between the return for Happy Cat and the market. Show your calculations. Correct your answers to 6 decimal places. [4 marks] c. Calculate the beta of Happy Cat. Show your calculations. [2 marks] d. Use the CAPM to find the required rate of return of Happy Cat. [3 marks] e. If Happy Cat distributes \$2 annual dividend in one year and the annual dividend is assumed to grow at 4% per year indefinitely, find the fair stock price of Happy Cat now. Show your workings. [3 marks] f. Suppose Steven buys 5,000 shares of Happy Cat at the fair stock price now. If the market drops by 1.5% in one month, estimate the dollar amount of capital gain or loss for his investment in one month. Explain your answer. [4 marks]