Question: Please answer the following answer A. Energy Bhd is currently evaluating two (2) securities: Active Bhd and Dynamic Bhd for investment purposes. The following information

Please answer the following answer

Please answer the following answer A. Energy Bhd is currently evaluating two

A. Energy Bhd is currently evaluating two (2) securities: Active Bhd and Dynamic Bhd for investment purposes. The following information relate to Active Bhd and Dynamic Bhd and the overall market for the coming year. Active Bhd Dynamic Bhd Expected Return 17.0% 14.50% Standard Deviation 12.50% 14.30% Price to Earnings Ratio (times) 20 10 Debt to Equity Ratio 63% 47% Total Earnings (RM) 12 million 37.5 million Outstanding Shares (units) 24 million 15 million Additional information: Market Expected Return 10.0% Market Standard Deviation 3.3% Covariance (Active, Dynamic) 42.4 Covariance (Active, Market) 15.5 Covariance (Dynamic, Market) 10.4 Correlation (Active, Dynamic) 0.237 Treasury bill rate 4% For the year 2021, Energy Bhd has allocated RM250,000 and is considering buying shares in both stocks based on the following proportion of investment portfolios: Active Bhd Dynamic Bhd Portfolio 1 10,000 units 6,000 units Portfolio 2 6,250 units 7,500 units Required: a. For each of the Portfolio 1 and 2, calculate the following: i. Expected Return of the portfolio. (5 marks) li. Standard Deviation of the portfolio. (4 marks) ili. Beta of the portfolio. (4 marks) b. Based on answer in (a) above, assist Energy Bhd to choose the better option of portfolio that fits its risk profile if Energy Bhd is a high tolerance of risk. (2 marks)

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