Question: PART I. PROBLEM SOLVING Direction: Read and analyze the problem/case and answers the question/s or requirement stated. Choose your answers clearly . (3x3=9marks) Consider the
PART I. PROBLEM SOLVING
Direction: Read and analyze the problem/case and answers the question/s or requirement stated. Choose your answers clearly. (3x3=9marks)
Consider the following investments
| Investment | Expected returns(r) | Standard Deviation |
| A | 5% | 10% |
| B | 7% | 11% |
| C | 6% | 12% |
| D | 6% | 10% |
Q1 . Refer to the investment analyze select the investments you will choose from A and D (3 marks)
Q 2. Refer to details in Qs11.Analyze from the given investments and decide which you will choose from B and C (3 marks)
Q 3. Refer to details given in Q 1. Analyze from the given the investments and decide which you will choose from C and D (3 marks)
Consider a portfolio comprised of three securities in the following proportions and with the indicated security beta
| Security | Amount received(p) | Beta(B) | Expected return(r) |
| A | $1.5 Million | 1.0 | 12% |
| B | $1.0 Million | 1.5 | 13.5% |
| C | $2 Million | 0.8 | 9% |
Q 4. Estimate the portfolio beta? (3 marks)
Q 5. Refer to the problem given in q13. Estimate the portfolios expected return? (3 marks)
( Marking Scheme;; 1 mark for correct answer and 2 marks for calculation=3 marks)
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