per share Mr. Mbugua is currently holding a portfolio consisting of shares of four companies quoted on Nairobi Securities Exchange as follows: Company Number of Beta equity Market Price Expected retum on equity Shares held co-efficient in the next year. Sh. % 20,000 1.12 63 18 N 30,000 0.89 50 23 30,000 0.70 45 11 20,000 1.60 80 17 The current market return is 14% and the treasury bills yield is 9% per annum Required: 4 marks i. Calculate the risk of Mr Mbugua's portfolio relative to that of the market. ii. Explain whether not Mr. Mbugua should change the composition of his portfolio (ascertain whether the securities are undervalued, indifferent or undervalued) 5 marks EZAO