You are given the following data which refers to the performance of the FTSE 100 and two

Question:

You are given the following data which refers to the performance of the FTSE 100 and two companies over the last financial year.
FTSE 100 Index at the end of 20X4........................................5,447
FTSE 100 Index at the end of 20X5........................................5,905
Dividend yield on the FTSE 100 for 20X5................................4.55%
Current redemption yield for 7% Treasury bills...........................3.78%

Required:
(a) Using the data above, calculate whether or not a diversified investor with shareholdings in the two companies will be satisfied with the returns they are receiving.
(b) Critically discuss how useful you consider the analysis in part (a) to be when making portfolio management decisions.

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...