The monthly datafor the Australian All Ordinaries share price index (Source:https://au.finance.yahoo.com/) is below:

Date

Open

Close

Jul 17

5,764.00

5,773.90

Aug 175,773.90

5,776.30

Sep 175,776.30

5,744.90

Oct 175,744.90

5,976.40

Nov 175,976.40

6,057.20

Dec 176,057.20

6,167.30

Jan 18

6,167.30

6,146.50

Feb 186,146.50

6,117.30

Mar 186,117.305,868.90

Apr 185,868.90

6,071.60

May 186,071.60

6,123.50

Jun 186,123.50

6,289.70

1. Calculate the monthly holding period returns (%) for the Australian share market (MKT) during 2017-2018 FY.(4 marks)
2. Calculate the average monthly holding period return (%) for the MKT (ALL ORDS).(1.5 marks)
3. Calculate the annual holding period return (in % terms) for the Australian share market (MKT) (as proxied by the All Ords index) during 2017-2018 FY.(3 marks)
4. Using Excel (XL) prepare a line graph comparing the monthly returns for A2M and the return on the Australian (MKT).(5 marks)
5. Calculate the risk for 2018 as measured by standard deviation of both A2M and the MKT.(4 marks)
6. According to Reuters Finance A2M Ltd has a Beta of 1.04. In terms of share investment, define what Beta represents. What does A2M's Beta of 1.04 mean? How risky is it?(5 marks)
7. The average return on the market (MKT) in Australia for the past 10 years has been 9.55% (Source:https://www.asx.com.au). The yield on Australian 10 year treasury bonds is currently 2.29%. Using these as proxies for the Return on Market (MKT) and Risk Free Rate (Rf), combine them with the A2M Beta (above) and calculate the return expected for A2M using the Capital Asset Pricing Model (CAPM).(4 marks)
8. Using the CAPM data from the previous question create an XL scatter plot graph to plot the Security Market Line (SML) using the Risk Free Rate, Return on Market, and A2M asdata points.(5 marks)
9. Recreate the graph from (viii) above but this time also include the actual 2018 returns for A2M and the MKT as previously found (using the same beta measures).(3 marks)
10. Based on your CAPM findings construct a portfolio made up of 40% A2M and 60% MKT. Calculate the estimated return and for this portfolio.(4 marks)