Question: Please help with a, b, c, d and e. Show all calculations. Question 42 Question ID: 919 Not yet saved Not graded P Flag question

Question 42 Question ID: 919 Not yet saved Not graded P Flag question This question is worth 10 marks in total. This is a written calculation question, and you should perform the necessary calculations/working on paper to later be scanned and uploaded. Start a new page for this question. For dollar amounts, give your answer to the nearest cent. For interest rates, give our answer as a percentage rounded to 2 decimal places. If any parts of the question use values from earlier parts, use the EXACT values from earlier parts. QUESTION START An investor buys 1 share of ABC Ltd at the price of $32 on December 31, 2019. The firm is not expected to pay any dividends. Consider the following three possible scenarios for the share price on December 31, 2020: $20 with a probability of 25%. $39 if the economy is "moderate", with a probability of 60%. $45 if the economy is "bad", with a probability of 15%. a) Calculate the expected return for holding the share for a year. (2 marks) b) Calculate the variance of return and standard deviation of return. (2 marks) c) On January 1, 2021, the share is worth $29.5 and the investor just received a dividend of $2.35. Calculate the total holding period return and dividend yield over the one-year period. (2 marks) d) Give one example of a diversifiable risk, and one example of a systemic risk. Clearly label your examples. (2 marks) e) Consider the statement "The primary goal of diversification is to minimise risk". Is this true or false? Discuss. (2 marks)
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