QUESTIONS Consider the performance of two securities and k over the five year period from 2014 to 2018. The annual return earned on each one of them is as provided in the table below Year 379 28.4 -15 a 2014 2015 2016 2017 2018 19.8 128 -208 58.6 -500 31.7 Required: Compute the following: a) Assume your organization had K150 million to invest on 01st January, 2014. If 70% was invested in security J over the holding period, the annual returns would you have earned from a portfolio comprising the two securities 06 Marks) b) The annual valatilities of the portfolio with the above investment proportions: assuming the correlation coefficient between returns on securities J and K remained constant at 0.04 over the holding period [10 Marks] c) Evaluate the performance of the portfolio for each year of the holding period and advise when the performance was satisfactory Assume a risk free rate of 6% (05 Marks] Total 20 Marks QUESTION 3 a) Clearly explain the features of Fixed Income Securities. Illustrate your response with a relevant example from the Zambian financial markets. (10 Marks] b) A 364 Days Treasury bill of K1,000 Face Value is currently on offer at K840.33. i. Calculate its Yield to maturity (YTM) at this price. [03 Marks] Assuming the market yields for similar Bills were 200 basis points higher and lower, calculate the trading price of the bill under each case. [03 Marks] Briefly comment on the relationship between the price of the Bill and its YTM exhibited above. [04 Marks] Total 20 Marks