Consider the performance of two securities, J and K over the five-year period from 2000 to 2004. The annual return earned on each one of them is as provided in the table below:

Year	J	K
	%	%
2000	-30.0	6.4
2001	55.9	-21.1
2002	15.7	-10.0
2003	75.9	35.0
2004	5.7	15.6

Required:

Compute the following:

The Arithmetic Mean returns of both securities over the 5-year holding period.

[02 Marks]

The Geometric Mean return of both securities over the 5-year holding period.

[03 Marks]

Assuming your organization had K100 million to invest on 01st January, 2000. If this was invested equally in the two securities, what terminal value would be accumulated after 5 years with annual compounding?

[05 Marks]

What level of volatility would your investments be exposed to over the holding period for each security?

[05 Marks]

Evaluate the performance of the securities individually. With hindsight, which security would you have advised management to invest in if it had to choose only one?

[05 Marks]

Total 20 Marks