.: Individual stocks (Total 25 marks ) i) Calculate each stocks average monthly return, its return variance and standard deviation over the period 01/2013 to 06/2017. (6 marks) ii) Using the price information of the FTSE All Share Index as a proxy for market portfolio, calculate each stocks beta over the period 01/2013 to 06/2017. (10 marks) iii) Explain why some stocks have beta s greater than 1 while others are below 1 (you may do some research on firm backgrounds and their business es). (9 marks) 2.2 : Portfolio Analysis (Total 25 marks ) i) Construct three types of portfolios. Portfolio A con sists of any 3 of the stocks, Portfolio B consists of any 6 of the stocks, and Portfolio C consists of all 10 stocks. Assuming that each stock has equal weight in the portfolio, calculate Portfolio A, B, and C s average monthly returns, return variances and standard deviations, and beta s. (10 marks) ii) Which of the Portfolios A, B, and C, has the highest return standard deviation? Does this portfolio ha ve the highest average monthly return? Can you explain why? (5 marks) iii) In terms of portfolio beta, which portfolio is the risk iest ? (3 marks) iv) Will the thre e portfolios have same ranking, if you rank their betas and return variances respectively? Can you provide economic reasons as to why the two rankings should be (in)consistent with each other? ( 7 marks ) 2.3: Comparing individual stock and portfolio (Total 25 marks) i) Is Portfolio Bs average month ly return higher than any of its 6 component stocks average monthly return s? Why? (6 marks) ii) Is Portfolio Bs return standard deviation higher than any of its 6 component stocks return standard deviation s? Why? (6 marks) iii) Is Portfolio Bs beta higher than any of its 6 component stocks beta s? Why? (6 marks) iv) Should investors invest their money in the component stock s or in the portfolio? Please provide justifications for your answer. (7 marks) 2.4: Choose your own portfo lio (Total 25 marks ) i) Construct your own portfolio which consists of a different number of stocks from Portfolio A, B, and C and is the best for its ret urn/risk characteristics. (6 marks) ii) Can you justify why you choose such a portfolio? (6 marks) iii) Are ther e any stocks which you should not include in your portfolio? Can you provide your justifications? (You may draw performance graphs of one stock against the market portfolio). (7 marks) iv) Can you find out which portfolios (i.e. Portfolio A, B, C and your own portfolio) or stocks (i.e. 10 sample stocks) perform badly or good in the period of 2015 to 2017. (6 marks)