Question
QUESTION 1 (25 MARKS) (a) Define Systematic Risk and Unsystematic Risk. Use a diagram to illustrate your answer. (5 marks) (b) Bee Plus plans to
QUESTION 1 (25 MARKS) (a) Define Systematic Risk and Unsystematic Risk. Use a diagram to illustrate your answer. (5 marks) (b) Bee Plus plans to form an investment portfolio that comprised of 40 percent investment in Share X, 35 percent investment in Share Y and 25 percent in Share Z. The followings are the estimated returns for all the three types of financial assets: Year Probability (P) Expected Return (%) of Financial Assets X Y Z Strong 0.48 10 15 20 Weak 0.52 10 6 1 Calculate: i. Expected return for each share. (9 marks) ii. Expected return for investment portfolio of share X, Y and Z. (3 marks) iii. Standard deviation for the investment portfolio. (8 marks)
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