B and C

You are looking at two investments with the following historical returns: Required: a) Calculate the arithmetic average return and standard deviation for both investments. (6 marks) b) If you invest $21,000 in Stock A and $9,000 in Stock B, what is the expected return on your portfolio? (3 marks) c) A Government of Canada Bond with five years to maturity paying a semi-annual coupon of 6.5%, is currently yielding 7%. How much money should an investor pay for this bond? Assume the face value is $1,000 and ignore transaction costs. (5 marks) Answer: d) An investor's marginal tax rate is 47% (total of federal, provincial and surtax) for ordinary income. For the Government of Canada Bond in part c), how much tax would the investor have to pay in year 5