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QUESTION 2 A. Portfolio Weights (%) Portfolio X Portfolio Y Asset Asset Beta 1 2 3 4 5 Total 1.30 0.70 1.25 1.10 0.90 30

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QUESTION 2 A. Portfolio Weights (%) Portfolio X Portfolio Y Asset Asset Beta 1 2 3 4 5 Total 1.30 0.70 1.25 1.10 0.90 30 20 10 10 30 100 Table 2 20 10 20 20 30 100 Annual returns (%) 17.5 13.0 11.0 12.0 9.0 i) Based on Table 2, compute the betas for portfolios X and Y. (12 marks) ii) Based on Table 2, by using the annual returns, determine which portfolio you would choose and explain why? (14 marks) What is the yield (internal rate of return, IRR) on an investment costing RM2000 today that you expect will be worth RM2500 at the end of 5 year holding period? (4 marks) B. (Total: 30 Marks)

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