Q2. 1. You have collected returns on 4S Corp and the NYSE index for five years: Year 2011 2012 2013 2014 2015 4S Corp 10% 5% -5% 20% -5% NYSE 5% 15% 8% 12% -5% a. Estimate the slope (beta) of the SML of 4S Corp. (10 marks) b. If you bought stock in 4S Corp. today how much would you expect to make as a return over the next year? [Assuming the six- (5 marks) c. Assume now that you are an undiversified investor and that you have all of your money invested in 4S Corporation. What month Treasury Bill rate is 6% and market return is 14.5%) would be a good measure of the risk that you are taking on? (5 marks) d. 4S is a diversified company and is planning to sell off one of its divisions. The division under consideration has assets which comprise 20% of the market value of 4S. The division's beta is twice the average beta for 4S Corp (before divestment). What is the beta of 4S Corporation after divesting this division? (10 marks) (Total: 30 marks)