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Information related to XXX and ..YYY stocks is given in the table. Year XXX Stock YYY Stock (Rs 2012 2013 2014 2015 2016 Cash flow
Information related to "XXX" and ..YYY stocks is given in the table. Year XXX Stock YYY Stock (Rs 2012 2013 2014 2015 2016 Cash flow 2.00 1.50 1.00 2.50 1.50 DividendOpening Closing Dividend Opening Closing Value 18.50 22.30 24.30 27.50 29.50 Price 20.40 25.50 32.50 34.20 33.70 Value Cash flow 25.50 32.50 34.20 33.70 35.50 1.00 1.50 0.50 1.50 1.00 Price 18.30 18.50 22.30 24.30 27.50 Calculate the arithmetic mean return, standard deviation, coefficient of variation (CV) and chances of obtaining negative return of both stocks. Comment on the risk of cach stock (8 Marks) (a) (b) Calculate the geometric mean return of bh XXX and YYY stocks. Compare these values with the arithmetic mcan rcturns calculated in part "(a)". (3 Marks) (c Calculate the cumulative wealth index of both stocks. (2 Marks) (d) Calculate the value at risk (VaR) at 10% significant level on equally weighted portfolio assuming the correlation between XXX and YYY is +0.25. (4 Marks) (e Assume that you have estimated beta values for stocks XXX and YYY at 1.5 and 0.75 respectively and also found that the average risk-free rate is 7% and average market return is 10%. Are these stocks fairly valued
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