The risk-free rate of return is 1.8% and the expected return on the market portfolio is 8.35%.

Given the following possible returns for Lidar Limited and the S&P/TSX Composite Index (found in Table 1.1):

1. a. Calculate the expected return for Lidar ( Please show your work step by step).
2. b. Calculate the expected return, variance and standard deviation for the S&P/TSX Composite Index (illustrate your solution using an embedded Excel Spreadsheet and please show your work).
3. c. Using an embedded Excel Spreadsheet, calculate the Covariance and Correlation Coefficient between Lidars returns and the market index returns. (Please show your work)
4. d. Calculate the Ex Ante Beta Coefficient for Lidar. (Please show your work step by step)
5. e. Is Lidar an aggressive or defensive investment? Explain in detail please.
6. f. Calculate the required rate of return on Lidar stock. (Please show your work)
7. g. Is Lidar over-priced, under-priced or fairly valued? Explain in detail please.

Table 1.1 - Forecast Possible Returns on Lidar Corp. and S&P/TSX Returns on S&P/TSX Possible Returns Composite State Probability Index Economic Boom 25% 47% 18% Moderate Growth 30% 23% 11% Normal 25% 90% Recession 20% -45% -6% ility O 7% Table 1.1 - Forecast Possible Returns on Lidar Corp. and S&P/TSX Returns on S&P/TSX Possible Returns Composite State Probability Index Economic Boom 25% 47% 18% Moderate Growth 30% 23% 11% Normal 25% 90% Recession 20% -45% -6% ility O 7%