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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 |
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 this market?
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Finance Applications And Theory
Authors: Marcia Cornett, Troy Adair, John Nofsinger
5th Edition
1260013987, 9781260013986
