ABC Investment Ltd has set up a portfolio that comprises Gold shares and Silver shares. The following information relates to these shares. Gold Silver Expected return 17% 12% Standard Deviation of return 15% 5% Correlation of coefficient - 0.5 Required: a) Determine the expected return of the portfolio if 65% of Gold shares and 35% of Silver shares are combined to form the portfolio. (1 mark) ANSWER: b) Determine the risk of the portfolio by calculating portfolio standard deviation given the same portfolio combination. (4 marks) ANSWER: c) Using CAPM, calculate beta coefficient of Silver shares, given the risk premium of 6.5% and risk free rate of 4.5%. (1 mark) ANSWER: For the past 5 years, the portfolio has the consecutive rate of returns of 12%, 15 %, -14%, 13% and 16%. Calculate the geormetric average return of this portfolio for the period. (1 mark)