QUESTION FOUR: (1.0 Mark) The bivariate probability distribution of rates of return of stock 1 and stock 2 over the next year is as follows: R2i State of Nature Probability of the RiJ State of Nature 0.25 0.25 0.25 0.25 0.2 0.1 0.3 0.5 0.1 0.2 -0.1 0.3 t an investor invests $20,000 out of his/her portfolio amount of $50,000 in stock 1 and the remainder amount in stock 2. Calculate the expected rate of return and risk of this portfolio. Also, calculate the expected value and expected net value of the portfolio at the end of the year. QUESTION FIVE: (0.5 Mark) ABC Ltd. issues 10,000 bonds, each with the face value of $1,000. The term of each bond is 20 years. The bond indenture of 10,000 bonds requires the equal annual sinking fund payments so that all the sinking fund payments, invested to earn 5% per annum, accumulate to an amount at the end of 20 year, which is equal to the total face value of all 10,000 bonds. Find the equal annual sinking fund payment. QUESTION SIX: (1.0 Mark) Consider the following probability distribution over the next year of the rates of return on stock A and Stock B. tc of Nature Prababilt StockAStock B 0.3 0.4 0.3 0.1 0.3 0.2 -0.2 0 0.6 Assume that the expected rates of return you will obtain from this bivariate probability distribution is also the required expected rates of return implied by the security market line of the capital asset pricing model. Assume that the risk free rate of interest is 3%, the expected rate of return on the market portfolio of 8% over the next year, and the capital asset pricing is valid. Calculate the systematic risk of each of the two stocks