questions 1 and 2 that its reffering to

9 1 Question 5 (5 Marks) 2 Refer to Questions 1 and 2. Richard has just received an unexpected 3 bonus at work worth $5,500 and, given the J. Corp.'s reputation 4 for excellent investment decision making, he will invest all of the bonus 5 in J Corp. stock. Given the rates of return for stocks A, B, C, and D 6 presented in Question 1 and the rates of return for J Corp. stock and 7 the market presented in Question 2, as well as the cash amounts he 8 is investing in stocks A, B, C, and D as you determined in Question 1, 10 a) What is the beta of Richard's portfolio? (3 Marks) Enter Answer 11 (round to two decimal points) 13 b) Richard's portfolio is... (2 Mark) Aggressive Defensive Check only one Neither 16 17 Enter your Final Answer Here 18 Complete your rough work in the space below 19 20 12 14 } 15 B A C D E G F H Richard must decide how to allocate the capital in his portfolio. Richard has $22,000 available to invest. He finds the rates of return for four stocks for the past 12 years and the results are given below. Richard plans to invest 25% of his funds in each stock. Enter Answer a) How much will he invest in each stock? (1 Mark) Enter Answer % b) The expected return of Richard's porfolio is: (2 Marks)(Round your answer to one one-hundreth of a percent) Enter Answer % c) The standard deviation of Richard's portfolio return is: (1 Mark)(Round your answer to one one hundredth of a percent) 1 Enter your Final Answer Here Year Stock A (%) Stock B (%) Stock C (%) Stock D (%) 1 -3.680 -0.830 1.730 -5.800 2 17.780 4.535 -3.635 26.390 3 24.960 6.330 -5.430 37.160 4 26.960 6.830 -5.930 40.160 5 -29 280 -7.230 8.130 -44 200 6 31.980 8.085 -7.185 47.690 7 25.680 6.510 -5.610 38 240 8 26.440 6.700 -5.800 39.380 9 10.320 2.670 -1.770 15.200 10 19.780 5.035 -4.135 29.390 11 -11 280 -2.730 3.630 -17.200 12 -13.280 -3.230 4.130 -20.200 Complete your rough work in the space below Question 2 (3 Marks) Anna is a Vice President at the J Corporation. The company is considering investing in a new factory and Anna must decide whether it is a feasible project. In order to assess the viability of the project, Anna must first calculate the rate of return that equity holders expect from the company stock. The annual returns for J Corp. and for a market index are given below. Currently, the risk-free rate of return is 1.6% and the market risk-premium is 3.5% Enter Answer Enter Answer Enter your Final Answer Here a) What is the beta of J Corp.'s stock? (1 Mark)(Round your answer to two decimal places) b) Using the CAPM model, what is the expected rate of return on J Corp. stock for the coming year? (2 Marks/Round your answer to one one hundreth of a percent) J Corp Market Return Return Year (%) (%) 1 -4.17 -2.00 2 17:29 8.73 3 24.47 12.32 4 26.47 13.32 5 -29.77 -14.80 31.49 15.83 25.19 12.68 25.95 13.06 9.83 5.00 10 19.29 9.73 11 -11 77 -5.80 12 - 13.77 -6.80 6 7 8 9 9 1 Question 5 (5 Marks) 2 Refer to Questions 1 and 2. Richard has just received an unexpected 3 bonus at work worth $5,500 and, given the J. Corp.'s reputation 4 for excellent investment decision making, he will invest all of the bonus 5 in J Corp. stock. Given the rates of return for stocks A, B, C, and D 6 presented in Question 1 and the rates of return for J Corp. stock and 7 the market presented in Question 2, as well as the cash amounts he 8 is investing in stocks A, B, C, and D as you determined in Question 1, 10 a) What is the beta of Richard's portfolio? (3 Marks) Enter Answer 11 (round to two decimal points) 13 b) Richard's portfolio is... (2 Mark) Aggressive Defensive Check only one Neither 16 17 Enter your Final Answer Here 18 Complete your rough work in the space below 19 20 12 14 } 15 B A C D E G F H Richard must decide how to allocate the capital in his portfolio. Richard has $22,000 available to invest. He finds the rates of return for four stocks for the past 12 years and the results are given below. Richard plans to invest 25% of his funds in each stock. Enter Answer a) How much will he invest in each stock? (1 Mark) Enter Answer % b) The expected return of Richard's porfolio is: (2 Marks)(Round your answer to one one-hundreth of a percent) Enter Answer % c) The standard deviation of Richard's portfolio return is: (1 Mark)(Round your answer to one one hundredth of a percent) 1 Enter your Final Answer Here Year Stock A (%) Stock B (%) Stock C (%) Stock D (%) 1 -3.680 -0.830 1.730 -5.800 2 17.780 4.535 -3.635 26.390 3 24.960 6.330 -5.430 37.160 4 26.960 6.830 -5.930 40.160 5 -29 280 -7.230 8.130 -44 200 6 31.980 8.085 -7.185 47.690 7 25.680 6.510 -5.610 38 240 8 26.440 6.700 -5.800 39.380 9 10.320 2.670 -1.770 15.200 10 19.780 5.035 -4.135 29.390 11 -11 280 -2.730 3.630 -17.200 12 -13.280 -3.230 4.130 -20.200 Complete your rough work in the space below Question 2 (3 Marks) Anna is a Vice President at the J Corporation. The company is considering investing in a new factory and Anna must decide whether it is a feasible project. In order to assess the viability of the project, Anna must first calculate the rate of return that equity holders expect from the company stock. The annual returns for J Corp. and for a market index are given below. Currently, the risk-free rate of return is 1.6% and the market risk-premium is 3.5% Enter Answer Enter Answer Enter your Final Answer Here a) What is the beta of J Corp.'s stock? (1 Mark)(Round your answer to two decimal places) b) Using the CAPM model, what is the expected rate of return on J Corp. stock for the coming year? (2 Marks/Round your answer to one one hundreth of a percent) J Corp Market Return Return Year (%) (%) 1 -4.17 -2.00 2 17:29 8.73 3 24.47 12.32 4 26.47 13.32 5 -29.77 -14.80 31.49 15.83 25.19 12.68 25.95 13.06 9.83 5.00 10 19.29 9.73 11 -11 77 -5.80 12 - 13.77 -6.80 6 7 8 9