Question $1$

Use the information given below to answer the following questions.

a$.$ What are the expected returns for Stock A$?$

b$.$ What are the standard deviations for Stock A$?$

c$.$ Calculate the coefficient of variation for Stock A and Stock B$,$ given the expected returns

of Stock B is $9\mathrm{.}10\%$ and its standard deviation is $9\mathrm{.}07\%.$ Which stock is riskier? $(3$ marks$)$

d$.$ Assuming you have invested RM $12,000$ in Stock A and RM$18,000$ in Stock B$,$ what is the

expected return on your portfolio?

Question $2$

Suppose you have invested RM$100,000$ in the following four stocks:

The risk$-$free rate is $5\%$ and the expected return on the market portfolio is $15\%.$

Required:

Based on Capital Asset Pricing Model $($CAPM$)$:

a$.$ Calculate the market risk premium.

b$.$ Calculate the required return for each stock.

c$.$ Calculate the beta and required return on the portfolio.