QUESTION 1 Suppose Oloto is weighing the opportunity and the risk of investing in any of the two individual securities ADB House (X1) and NIB Hotels (X2) made of Real Estates Investment Trust with returns as: X2 Years X1 Probability 1 0.1 4. -3 2 10.15 7 6 3 0.2 8 9 4 0.15 11 12 5 0.1 5 8 6 0.2 10 11 7 0.1 3 - 7 a) Compute the expected return for each asset class. (3 Marks) b) Find the portfolio return. (2 Marks) c) Calculate the expected risks for each security and explain your results. ( 4 Marks) d) Calculate the coefficient of variation (CV) of the securities and explain your results, (2 Marks) e) Find the Sharpe ration and explain given riskfree 63.15%. (2 Marks) f) Calculate the covariance for the securities. (2 Marks) g) Calculate the correlation and explain the results. (2 Marks) h) Find the portfolio risk and explain your answer. (5 Marks ) Col Suppose Mr. Rokotoo informed you that he will be going on retirement in 5 years from now. He wants to increase his regular contributions for the remaining periods. At the beginning of the 1"' year, he contributed GHS 1,200 and GHS 1,450 at the beginning of the 2 year. He increases the contributions to GHS 2,800 at the beginning of 3 year and to GHS 3,508 at the 4th year. Towards the end of the 5th year, he could not contribute any amount but he rather withdrew GHS 7,547 to settle emergence request. The frequency of the interest rates for various years are such that they kept varying. In year 1, it was 18.5%; year 2, it was 17.25% and year 3, it was 16.15% and the year 4, it was 16.95% (i) Using the simple interest rate, calculate the future value of Mr Rokotoo and explain your results in relation to the effect of the withdrawal he made getting to the end of the period. (ii) Using the compound interest, compute the future value for Mr Rokotoo and what advice would you give to Mr Rokotoo. (iii) (4 Marks) sus (iv) Calculate the quarterly compounded future value of Mr Rokotoo and consider the (5 Marks) situation that he roll-over the funds at the beginning of the 5th year to the year end at a T-bill rate of 13.5% without making any withdrawal. (5 Marks) Distinguish between: a) Securities market and capital market (2 Marks) b) Collective investment schemes and repurchase agreement (2 Marks