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QUESTION TWO Below is a 10-year ex-post annual returns data for ABC Oil and DEF Gas listed of ZIM Stock Exchange. YEAR ABC Oil
QUESTION TWO Below is a 10-year ex-post annual returns data for ABC Oil and DEF Gas listed of ZIM Stock Exchange. YEAR ABC Oil DEF Gas R(B)-E(B) R(ABC)- R(ABC)- E(ABC) E(ABC) x R(DEF)- E(DEF) 2013 -2.70 -12.0 2014 -28.9 -19.1 2015 14.8 63.4 2016 21.7 15.4 2017 05.6 09.4 2018 67.2 07.7 2019 70.0 10.4 2020 80.3 -03.3 2021 -08.3 11.9 2022 44.8 32.3 (a) Compute the mean annual return for ABC= (b) Compute the mean annual return for DEF= (c) Compute the Standard Deviation for ABC= (d) Compute the Standard Deviation for DEF (e) Compute the covariance between the returns of the two firms= (f) Compute the correlation coefficient (g) As an analyst, would recommend both stocks for your client's portfolio? = (h) Compute the risk of this investment
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