please take note , the securities are two in (ii) but not four as stated in the question.

sktop/Group%20Assignment pdf GROUP 3 1. You are presented with the following information relating to the expected performance of the stock of company J after one year: 150 Returns 100 120 130 180 220 Probability 0.05 0.14 0.2 0.36 0.2 0.05 1) Determine the expected return, the standard deviation of returns and coefficient of variation for the above stock. [4] ii) Suppose you have decided to invest in the above stock, based on the values computed in (i). However, you have read in the financial press about the risk reduction benefits of diversification and decided to combine stock with other securities. Your Financial Analyst has provided you with the following information relating to two stocks of companies K and L. Further the correlation coefficients between the returns on pair-wise combinations of the four securities are provided: Security ER Correlation with Standard deviation 50 10 K L 250 80 0.5 0.1 -0.2 3 / 3 i) Determine the expected return, the standard deviation of returns and coefficient of variation for the above stock. [4] ii) Suppose you have decided to invest in the above stock, based on the values computed in (1). However, you have read in the financial press about the risk reduction benefits of diversification and decided to combine stock J with other securities. Your Financial Analyst has provided you with the following information relating to two stocks of companies K and L. Further the correlation coefficients between the returns on pair-wise combinations of the four securities are provided: Security ER Correlation with Standard deviation 50 10 K L 250 80 0.5 0.1 -0.2 a) Mr PY has N$ 1 000 000-00 to invest in a portfolio that is made up of three securities J, K and L. He has indicated that he wants to invest NS 500 000-00 is K security and an equal proportion in J and L securities. Calculate the risk of this portfolio. [4] b) Suppose that a certain investor wants to invest in securities K and L. Construct the swights of the minimum since pod folio.ndishon that is close