Case study 2 (Risk and return): (50 marks)

This case requires you to perform calculation on risk and return using company data for the

company that you recommended in Case 1 above Collect the monthly prices of stocks of X Ltd

and monthly prices of S&P/ASX 200 (^AXJO) over the period 1 July 2014 to 30 June 2019.

Using the price data, perform the following calculations and suggest on the suitability of

investing in stocks of FMG Ltd:

1. Monthly returns from stocks of X Ltd (5 marks)

2. Yearly returns from stocks of X Ltd (5 marks)

3. Average yearly returns over the five years from stocks of X Ltd (5 marks)

4. Monthly returns from ^AXJO (5 marks)

5. Yearly returns from ^AXJO (5 marks)

6. Average yearly returns over the five years from ^AXJO (5 marks)

7. Total risk associated to investment in X Ltd (perform one calculation using 60 monthly

returns) (5 marks)

8. Total risk associated to investment in ^AXJO (perform one calculation using 60 monthly

returns) (5 marks)

9. Systematic risk of stocks of X Ltd (perform one calculation using 60 monthly returns) (5

marks)

10. Unsystematic risk of stocks of X Ltd (perform one calculation using 60 monthly returns). On

the basis of the above calculations do you think X Ltd is a good investment