A UNIVERS My Sites My Library IT Support Useful Links Mahara Use the following information to answer ) BHP Ltd S&P/ASX200 Monthly average return 1.3% 0.17% Standard Deviation 7.87% 4.38% Covariance between BHP and S&P/ASX200 0.0020 b) Compute the following. 0 Calculate the correlation coefficient between BHP and S&P/ASX200 and interpret the answer. (2 marks) 11) Calculate the beta of BHP and interpret the answer. (2 marks) Assuming the market risk premium of 6% and the risk-free rate of 1%, compute the required rate of return of BHP Ltd. (2 marks) 1) Assuming the annual average return of 15% for BHP, is BHP underpriced or overpriced? Would you buy or sell BHP shares? (3 marks) V) Draw the Security Market Line using answers you obtained above. Label X-axis, Y-axis and intercept. Clearly present values on X- and Y-axis when you locate the expected and required returns of BHP Ltd in the graph (4 marks)