Question 2 (25 Marks) Link Investments Limited, the company that you incorporated two years ago was selected by Norman Frank for investment advice. Frank provided you with data, which be received from a friend but was unable to use it due to his limited knowledge of finance Given that the risk-free rate of interest is 6%, the market rate of retum is 12% and the standard deviation of the market is 50%. Using the data in the table, provide the values and analysis for Frank Stock % of Portfolio COV (RR) Current Price SNB 20% 0.175 25 BMM 30% 0.25 40 TTR 15% 0.2875 33 MFJ 25% 0.35 64 VCT 10% -0.075 50 Expected Price 27 42 39 65 54 Expected Dividends 0.50 0.50 1.00 1.10 a) Calculate the beta for each stock (5 Marks) b) Calculate the estimated return for each stock. (5 Marks) c) Calculate the required return for each stock (5 Marks) d) Calculate the alpha for each stock, then advice Frank if the stocks are underpriced or overpriced and what possible action to be taken based on these results. (5 Marks) c) Using the values from (b) above calculate the estimated return of the portfolio consisting of all five stocks (2 Marks) Using the values from a) above calculate the beta of the portfolio consisting of all five stocks. Comment on the results (3 Marks) Question 2 (25 Marks) Link Investments Limited, the company that you incorporated two years ago was selected by Norman Frank for investment advice. Frank provided you with data, which be received from a friend but was unable to use it due to his limited knowledge of finance Given that the risk-free rate of interest is 6%, the market rate of retum is 12% and the standard deviation of the market is 50%. Using the data in the table, provide the values and analysis for Frank Stock % of Portfolio COV (RR) Current Price SNB 20% 0.175 25 BMM 30% 0.25 40 TTR 15% 0.2875 33 MFJ 25% 0.35 64 VCT 10% -0.075 50 Expected Price 27 42 39 65 54 Expected Dividends 0.50 0.50 1.00 1.10 a) Calculate the beta for each stock (5 Marks) b) Calculate the estimated return for each stock. (5 Marks) c) Calculate the required return for each stock (5 Marks) d) Calculate the alpha for each stock, then advice Frank if the stocks are underpriced or overpriced and what possible action to be taken based on these results. (5 Marks) c) Using the values from (b) above calculate the estimated return of the portfolio consisting of all five stocks (2 Marks) Using the values from a) above calculate the beta of the portfolio consisting of all five stocks. Comment on the results