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Question 1 Helen is considering making an investment to Project Bunga Kertas or Project Bunga Kantan. Project Bunga Kertas is forecasted to produce the following:

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Question 1 Helen is considering making an investment to Project Bunga Kertas or Project Bunga Kantan. Project Bunga Kertas is forecasted to produce the following: a 30% probability of 11% return; a 40% probability of a 15% return; and a 30% probability of 19% return. Project Bunga Kantan is forecasted to produce the following: a 20% probability of 5% loss; a 30% probability of a 6% return; and a 50% probability of 22% return. From the above information you are required to answer the following questions. a. Compute the expected rate of return (k^) for each project. b. From your answer in part (a), compute the standard deviation (a) and coefficient variation (CV) for each project. c. Based on your findings in part (b), which project that Helen will be investing to? Explain your answer. Question 2 a. You are holding a portfolio made up of the following stocks: Investment value (in RM) 2,000 5,000 3,000 Stock A Stock B Stock C Beta 1.5 1.2 0.80 If the market' expected rate of return is 15%, and the risk-free rate is 4%, calculate the expected rate of return on this portfolio. b. Compute the expected rate of return on Hijau Berhad's common stock, given the information that Hijau Berhad common stock has a beta of 1.3, and the expected risk-free rate is 4% and the market risk premium is 12%. c. Merah Berhad's common stock has a beta of 1.8. If the expected risk-free rate is 5% and the expected return on the market is 16%, what is the expected rate of return on Merah's stock

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