Question 6: (a) Given the holding-period returns shown here, compute the average returns and the standard deviations for the Zemin Corporation and for the market. MONTH ZEMIN CORR MARKET 4 1 616 2 2 2 Note that in this question, unlike the previous one, you can use the formula below to calculate the standard deviations of Zemin Corp and the Market (separately ofcourse), because you don't have any probablities, or in other words the probability of each of these historical returns happening 1-1 (b) If Zemin's beta and the risk-free rate are as stated beloy, What would be an appropriate required return for an investor ovning Zemin? (Note: Because the returns of Zemin Corporation are based on monthly data, you will need to annualize the returns to make them compatible with the risk- free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by 12.) HR 3 -3 -2 5 2 2 Note that in this question, unlike the previous one, you can use the formula below to calculate the standard deviations of Zemin Corp and the Markeparately ofcourse), because you don't have any probablities, or in other words the probability of each of these historical returns happening is assumed to be equal. S = 11 - 1 V (b) If Zemin's beta and the risk-free rate are as stated below, vhat would be an appropriate required return for an investor ovning Zemin? (Note: Because the returns of Zemin Corporation are based on monthly data, you will need to annualize the returns to make them compatible with the risk- free rate. For simplicity, you can convert from monthly to yearly returns by multiplying the average monthly returns by Zemin Corp's Beta Risk Free Rate 1.51 3. 107 (c) How does Zemin's historical average return compare with the return you believe to be a fair return, given the firm's systematic risk