Your company can invest in either, or both of two investments: Hitam Berhad shares and Putih Berhad shares. The expected returns on each of these two investments vary depending on economic conditions. The following table shows the expected returns and the likelihood of the economic conditions.

a) If you invest in a portfolio comprising both shares, it will be 60% in Hitam Berhad, and 40% in Putih Berhad, calculate

i) the average return for Hitam Berhad shares

ii) the average return for Putih Berhad shares

iii) the weighted return of Hitam and Putih shares

iv) the risk for Hitam Berhad shares

v) the risk for Putih Berhad shares

vi) the weighted risk for Hitam and Putih shares vii) the correlation between Hitam and Putih shares viii) the average return for portfolio.

ix) the risk of the portfolio.

b) Based on your response above, explain what occurred to the rate of return and risk when you moved from individual shares to a portfolio.

\begin{tabular}{|c|c|c|c|} \hline Economic conditions & Probability & HitamBerhadreturns(%) & PutihBerhadreturns(%) \\ \hline Recession & 15% & 10 & (5) \\ \hline Normal & 55% & 12 & 18 \\ \hline Boom & 30% & 16 & 28 \\ \hline \end{tabular}