QUESTIONI (a) In investments, what is the relationship between risk and return? Why is it impo from an investment point of view to distinguish between the stages in an individual's life cycle? Shouldn't an older retired investor be more willing to accept investment risk, in view of his or her greater accumulated wealth? (12 marks) (b) Consider the following information: State of Economy Boom Bust Probability Return on Stock A Return on Stock B 0.6 0.4 0.07 0.13 0.15 0.00 (i) Calculate the mean return and variance for each stock. Which stock would (i) Find the covariance for the returns. What is the implication of this? (iii) Find the standard deviation of a portfolio invested 45% each in A and 55 % in you invest in and why? (6 marks) (3 marks) (4 marks) (Total: 25 marks) B and interpret your results