Subject is Investment Management

QUESTION FIVE [20] 5.1 Your manager has asked you to analyse two stocks, X and Y. Stock X has an expected return of 17% and a beta of 1.50. Stock Y has a beta of 0.80 and an expected return of 10.5%. The risk-free rate and the expected return on the market are 5.5% and 13%, respectively. 5.1.1 Using the Treynor measure, calculate the return to systematic risk for stock X and Y (5) 5.1.2 Calculate the excess return per systematic risk for X and Y (use the Jensen measure) (5) 5.2 Table 5.1 below presents some information from TWESE Company. Using this table, analyse this company's prospects on behalf of a potential investor. (10) June 2017 June 2019 R0.74 Table 5.1 Market price ratios Formula June 2016 Earnings per share Net profit/ no. of shares R0.16 PE Market price per share/EPS R15.80 Book value per Total assets / no. of shares R14.80 share Market-to-book value Market price per share / book 0.16 value per share R11.40 R14.35 R0.43 R10.90 R14.27 0.56 0.31