Elon is contemplating investing in Apple Technologies which report shows has a 10 year annual return of 7.65% and a standard deviation of 13.24%. Over the same period, the technologies Index closing figures are as follows:

Year As at 31 December

2010 1,583.26

2011 1,495.55

2012 1,732.29

2013 2,194.47

2014 2,302.87

2015 2,282.84

2016 2,454.28

2017 3,004.04

2018 2,742.39

2019 3,501.21

2020 4,057.90

1. Determine the annual market return and average return for the last 10 years.

2. What is the market risk over the same period?

3. If the correlation coefficient between Gajah and the market is 0.87, calculate the beta of

i. Market

ii. Apple

4. Assuming the risk-free rate of return is 2.5%, what is the expected returns for Apple Technologies?

5. By Using dividend discount model

a. For 2020, Apple paid a dividend of $0.14 per share. If the company expects to grow at a rate of 5% for the next 3 years, 4.5% the next 2 years and after that 3.25% for the long run, how much should an investor expect to pay for the stock? (15 marks)

b. If the current stock price of Apple Technologies is $2.1232, would you recommend your investors to acquire the companys shares? (5 marks)