Question 19 You are given the following rates of return on two companies, X and Y, for the recent five years. Year X(%) Y(%) 2017 20 24 2018 4 12 2019 -6 16 2020 8 -4 2021 24 40 Required: (a) Calculate the mean return and standard deviation on X and Y based on the information above. (2 marks) (b) Calculate the coefficient of correlation for these two stocks. (2 marks) (c) Plot an efficient frontier. Note that the portfolio weights should range from 0 to 1 by the increment of 0.2. (8 marks) (d) In relation to this question explain the concept of risk diversification. (3 marks) (Total 15 marks) Table 1. Present value of to be invested the end of the periode 35 NE 1 O. 3 OM 1060 0943 0915 ELNO SIR SS 0,42 0853 0.925 0907 KM 0.855 032 022714 0.70 2S HO HB 3 4 3 6 7 016 0943 0.934 0.00 OS 0371 0.853 951 0942 09 WO LEXO 0.72 0.747 0705 0912 0847 0713 0.750 2.735 0.70 0.683 O 060 0621 0.630 0:36 0564 057 0513 0467 500 0.44 0463 0492 156 NO we 0914 6 01 0.71 166 0.744 LO OCTO 0.731 0.703.645 0.614 SO 2.592 0558 sos EXO 1 2 3 4 5 0.901 0812 0.711 0.143 we JAN 0.293 0277 0570 0.797 2.76 746 0.712 0.675 0636 0613 572 0.567 0519 0.507 40 0.456 0459 0.49 0.400 0.375 0.04 0353 0.361 0133 0.322 0.295 020 0.347 552 0.476 0410 0.91 0.535 42 0034 0.101 0.357 OSS 0.547 050 0.731 0715 076 . 64 0.000 0.593 0319 0:54 0516 6.99 0.455 0437 0403 370 353 0335 0314 20 0 0209 0.343 235 0.000194 WEB Site 9 10 Disk College 2001 BULN286 Page 1 of 2 Table 2. Annuity of lead leterest Rate 1 090 0.952 0915 090 1833 0-980 192 24 3.BON 0.971 1913 2029 3.917 0.017 1999 NOW! TENT 0436 1.753 2577 3312 0900 1.75 247 JI 2.775 36. 2723 3546 346 09 1970 241 3.902 4.53 5.795 6790 7652 3.56 4 5 6 7 4492 3:33 4.100 417 LITS WOS SET S60 6492 7325 162 3.9 6000 6.733 7435 4919 S 210 7 6.463 7.100 1.00 44 S01 $ 535 5.995 6415 4 5.335 7.000 9.76 5.747 9 6515 7024 LE DESS 7.100 6110 2 16 0893 2960 an 0.00 1949 1 2 3 4 $ OS 16 20361 0377 10 2392 2.914 141 233 1/4 0901 1.719 2:44 3:10 1.69 4231 4.712 5.14 $537 SK 0255 15 2210 2. 1199 1506 2.134 0:333 1531 2.100 2.5 2011 3352 1214 2127 2402 3.037 1605 #111 4564 496 $32 5650 LISE ME 105 1410 ME SEE 4160 3.605 4288 19 4946 799 $132 14 4.07 4.305 9 10 4031 4451 2610 4.161 4319 Beck College 2000 BUMN03256 Page 2 of 2