Q.3Set. (A) The forecasted returns of two stocks in different economic conditions are as Calculate the following: (a) What is the expected return and risk if you invest only in stock A? [1 Mark] (b) What is the expected return and risk if you invest only in stock B? [1 Mark] (c) What is the expected return and risk if you invest in a portfolio consisting of stock A and B in equal proportion? [3 Marks] Q.3Set. (B) The stock of X Ltd. Performs well relative to other stocks during recessionary period. The stock of Y Ltd., on the other hand, does well during growth periods. Both the stocks are currently selling for Rs. 100 per share. You assess the rupee return (dividend plus orice) of these stocks for the next year as follows. Calculate the expected return and standard deviation of investing. (a) Rs. 1000 in the equity stock of X Ltd. [1 Mark] (b) Rs. 1000 in the equity stock of Y Ltd. [1 Mark] (c) Rs. 500 each in the equity stock of X Ltd. and Y Ltd. [3 Marks] Q.4Set. (A) Answer the following questions (a) Mr. Y bought a share 25 years ago for Rs. 15. It is currently selling at Rs. 4500 . What is the CAGR assuming that the company has not paid any dividend in these 25 years. (b) The closing price of share last year was Rs. 50 . The dividend per share was Rs. 5 during the year. The current closing price is Rs. 57. Calculate the percentage return on the share, showing the dividend yield and capital gain rate. [3 Marks] Q.4Set. (B) Answer the following questions (a) A 1000 par value bond, bearing a coupon rate of 14 per cent, will mature after 10 years. The required rate of return on this bond is 15 per cent. What is the value of this bond? [2 Marks] (b) A 100 par value bond bears a coupon rate of 14 per cent and matures after 5 ears. Interest is payable semi-annually. Compute the value of the bond if the required rate of return is 16 percent. [3 Marks]