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(SML, finding beta) The Northern Peninsula stock market has only two listed stocks, Big Mining and Shallow Mining. The market portfolio is composed of 40%
(SML, finding beta) The Northern Peninsula stock market has only two listed stocks, Big Mining and Shallow Mining. The market portfolio is composed of 40% Big Mining and 60% Shallow Mining. Using the data below, find the of each of the two stocks.
| NORTHERN PENINSULA STOCK MARKET | |||
| Big Mining | Shallow Mining | ||
| Expected return | 15% | 25% | |
| Return standard deviation | 25% | 40% | |
| Covariance of returns | 0.05 | ||
*PLEASE USE EXCEL FORMULAS TO SOLVE*
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