Question 03

a) Hamelton ltd has following information of two investment project, Apex (A) and Bata (B), given in the table.

You are required to calculate i) Expected return ii) Standard Deviation iii) Co-efficient of variance. iv) Comments which one is risky and why?

b)

Mr. Jhon wants to buy the common stock of Hydro electric company. The risk free rate of return is 8% on government bond. The present market portfolio return is 15%. If the beta of systemeatic risk is 1.20, what is the cost of stock?

Note: Only a well-explained non-plagiarized answer would be rate positive, and vice versa.

.10 .20 .40 .20 .10 13000 13500 14000 14500 15000 Probability Distribution Cash flow of project A Cash flow of project B 12000 13000 14000 15000 16000