Question 6 a) Mike has $10,000 to invest in a stock portfolio. Mike's choices are Stock ABC with an expected return of 14 percent and Stock XYZ with an expected return of 9 percent. If Mike's goal is to create a portfolio with an expected return of 12.2 percent, how much money will Mike invest in each stock? (6 marks) b) A fund manager is managing a portfolio that consists of three stocks (A, B and C). He invests $40,000 in A, $30,000 in B and $30,000 in C respectively. The betas for A, B and C stocks are 1.80, 2.05 and 0.95 respectively. If the T-bills yields 6% and the expected return on the market portfolio is 9%, calculate the expected return and the beta for the portfolio. (6 marks) Explain what impact each of the following events would have on a well-diversified portfolio i) The stock market declines by 10 percent. (4 marks) c) ii) One of the stocks in the portfolio suspends its dividend payment. (4 marks) d) How are risk and return related, both in theory and in practice? Explain with a diagram