QUESTION FIVE Consider the following observed performance of two securities, J and K on the LUSE: Year LUSE All Share J K Index % % % - -4 -2 -1 II -2 0 -0.2 III 0 2 0.6 IV 2 5 2 6 V 4 8 Tota a Required: A. Which of the two stocks has higher total risk? Explain. [10 Marks] B. Compute and explain the systematic risk of each security. [5 Marks] C. Compute and explain the diversification potential of each security in this market? [5 Marks] [TOTAL: 20 MARKS] QUESTION FIVE Consider the following observed performance of two securities, J and K on the LUSE: Year LUSE All Share J K Index % % % - -4 -2 -1 II -2 0 -0.2 III 0 2 0.6 IV 2 5 2 6 V 4 8 Tota a Required: A. Which of the two stocks has higher total risk? Explain. [10 Marks] B. Compute and explain the systematic risk of each security. [5 Marks] C. Compute and explain the diversification potential of each security in this market? [5 Marks] [TOTAL: 20 MARKS]