Date Question 19 A company is planning to invest in a stock with the following samples of stock price history for KKL and MPC. KKL closing KKL Dividend MPC closing MPC Dividend stock price stock price Dec 00 60.938 45.688 Jan 01 58.00 48.20 Feb 01 53.03 42.50 Mar 01 45.16 0.18 43.10 0.04 Apr 01 46.19 47.10 May 01 47.40 49.29 Jun 01 45.00 0.18 47.24 0.04 Jul 01 44.60 50.37 Aug 01 48.67 45.95 0.04 Sep 01 46.85 0.18 38.37 Oct 01 47.88 38.23 Nov 01 46.96 0.18 46.65 0.05 Dec 01 47.15 51.01 The market returns for the twelve months are given below; Market Returns 6.94% -9.87 4.86 6.62 Date Jan 01 Feb 01 Mar 01 Apr 01 May 01 Jun 01 Jul 01 Aug 01 Sep 01 Oct 01 Nov 01 -7.64 8.96 -4.45 1.98 4.76 -8.93 -2.55 5.1 Dec 01 a) Calculate the risk associated with investing in these stocks. b) Calculate the correlation coefficient between the two stocks c) Calculate the beta associated with each of these stocks d) Explain the betas of the two stocks