1. You are given the following equally likely prices of security A that is trading on the Toronto Stock Exchange:

   25.50 33.70. 36.50 38.70

2. You are also given the following details of security B: mean price of 33.60, variance of 25.01, negative semi-variance of 20.8 and positive semi-variance of 32.5.

   Compute for security A, the mean price, variance, negative semi-variance and the positive semi-variance. Compare and contrast these measures for securities A and B and comment on your results as well as the adequacy of variance as a measure of risk.

   b) Can the composition of a frontier portfolio include any assets not on the frontier? Explain.

3. c) Illustrate, using diagrams, the relationship between correlation, covariance, variance and beta. Define, the correlation of the returns of a feasible asset with the returns of the market, as well as, the beta of that asset.