ASSIGNMENT 1 You work with UGBS Capital, a brokerage firm in Ghana. Owor, an illiterate businessman, visited your firm for a piece of investment advice and to possibly make some investments. Although an accomplished businessman, he was advised by his son to buy some shares on the Ghana Stock Exchange in other to diversify his portfolio. Your boss has asked you to consider either Kokonsa Industries or Zanziba Incorporated The share prices and dividends for the two companies and the returns on the Ghana Stock Exchange are shown below for the period 2016 2021. Required a. Based on your understanding of Risk and Return, explain to Owor what portfolio means in simple terms and why he should heed his son's advice. b. Use the data given to calculate the annual returns for Kokonsa, Zanziba and GSE index using 2010 as the base year. c. Compute the average returns (Arithmetic Average) for each of the stocks over the tenyear period (2011-2020) d. Calculate the risk (standard deviation of returns) for Kokonsa, Zanziba and GSE index. c. Calculate the coefficient of variation for both companies f. Compare the two companies regarding risk and returns and advise Owor on which one to invest in. g. Calculate the covariance and the correlation coefficient between the two stocks h. Assuming Owor wants to invest the same amount in each of the stocks, what will be his portfolio risk and portfolio return i. Compute the beta for both Kokonsa, and Zanziba j. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is "riskier"? Explain. k. Based on your knowledge of the market beta, do you think Owor will be adequately compensated for the level of risk he is willing to assume? 1. Assuming the risk-free rate is 5%, what is the expected rate of return using the CAPM? ASSIGNMENT 1 You work with UGBS Capital, a brokerage firm in Ghana. Owor, an illiterate businessman, visited your firm for a piece of investment advice and to possibly make some investments. Although an accomplished businessman, he was advised by his son to buy some shares on the Ghana Stock Exchange in other to diversify his portfolio. Your boss has asked you to consider either Kokonsa Industries or Zanziba Incorporated The share prices and dividends for the two companies and the returns on the Ghana Stock Exchange are shown below for the period 2016 2021. Required a. Based on your understanding of Risk and Return, explain to Owor what portfolio means in simple terms and why he should heed his son's advice. b. Use the data given to calculate the annual returns for Kokonsa, Zanziba and GSE index using 2010 as the base year. c. Compute the average returns (Arithmetic Average) for each of the stocks over the tenyear period (2011-2020) d. Calculate the risk (standard deviation of returns) for Kokonsa, Zanziba and GSE index. c. Calculate the coefficient of variation for both companies f. Compare the two companies regarding risk and returns and advise Owor on which one to invest in. g. Calculate the covariance and the correlation coefficient between the two stocks h. Assuming Owor wants to invest the same amount in each of the stocks, what will be his portfolio risk and portfolio return i. Compute the beta for both Kokonsa, and Zanziba j. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is "riskier"? Explain. k. Based on your knowledge of the market beta, do you think Owor will be adequately compensated for the level of risk he is willing to assume? 1. Assuming the risk-free rate is 5%, what is the expected rate of return using the CAPM
