I need help

Problems/questions:

1.What effect will diversifying your portfolio have on your returns and your level of risk?

2.What are differences between Systematic and Unsystematic Risk?

3.Use the CAPM to compute the reasonable return for each of these fashion related stocks.Use 0.5% as the risk free rate of return use 5.5% as the market rate of return.Retrieve beta from Yahoo Finance at http://finance.yahoo.com/ or use Google. (please indicate which website you retrieved Beta from).

• PVH Corp (PVH)
• Tiffany (TIF)
• L Brands (LB)

4.Use the CAPM to compute the reasonable return for each of these stocks.Use risk free rate of return and the market rate of return given in #3, above.

• d.Pepsi (PEP) (4pts)
• e.Johnson & Johnson (JNJ) (4pts)
• f.Procter & Gamble (PG) (4pts)

5.Why do the returns you computed above represent

• a.a reasonable (or fair) return for each stock?
• b.The required return for each stock?

6.What do you notice about the pattern or trend of returns for the fashion companies (in #1) as compare to those of the non-fashion companies (in #2)?Why does that occur?Does that make sense in terms of the line of business of the companies in the respective groups?

7.What is holding period return?

| 8. Please calculate holding period return for periods 2, 3, & 4 for both Jazmin & Solomon. (lSpts) 9. Levine Manufacturing, Inc. is considering several investments. The rate on Treasury bills is currently 3.25%, and the expected return for the market is 13.5%. What should be the required rates of return for each security using the CAPM? (l Spts) Security Beta X 0.85 Y 1.21 Z 4.25