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Consider the following observed performance of two securities, J and K on the LUSE year LUSE all share index J K % % % I
Consider the following observed performance of two securities, J and K on the LUSE
year | LUSE all share index | J | K |
| % | % | % |
I | -4 | -2 | -1 |
II | -2 | 0 | -0.2 |
III | 0 | 2 | 0.6 |
IV | 2 | 5 | 2 |
V | 4 | 8 | 6 |
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REQUIRED
- Which of the two stocks has higher total risk? Explain
- Compute and explain the systematic risk of each security
- Compute and explain the diversification potential of each security in the market
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