Given below is hypothetical data on two stocks on the LUSE and the market data (All Lusaka Share Index). The market data already includes dividends paid during the year.

Stock 1 Stock 2 Market Index

Year Stock Price Dividend Stock Price Dividend (Includes Dividends)

2013: K25.88 K1.73 K73.13 K4.50 17,495.97

2012: 22.13 1.59 78.45 4.35 13,178.55

2011: 24.75 1.50 73.13 4.13 13,019.97

2010: 16.13 1.43 85.88 3.75 9,651.05

2009: 17.06 1.35 90.00 3.38 8,403.42

2008: 11.44 1.28 83.63 3.00 7,058.96

Required:

Use Excel for the following questions (The worksheet to be uploaded in Moodle):

1. Prepare a table presenting the Returns on the three securities for each year (Years, as Rows; Security Names as Columns).
2. Determine and explain the following for each security by referring to part (i) above:
   • The appropriate Annual Average Return
   • The Total risk exposure
   • The Downside deviation (Semi deviation)
   • The relationship between Stock 1 and the market, as well as Stock 2 and the market.

[30 Marks]