Question 1 (15 marks) Use the following information to answer a). XYZ Ltd Price Dividend 1 July 2020 $41.84 4 September 2020 $0.46 1 Jan 2021 $38.68 a) Assume that you purchased XYZ Ltd shares on 1 July 2020 and sold them on 1 Jan 2021. A dividend of $0.46 was paid on 4 Sep 2020. Calculate the realised return for the period. (2 marks) Use the following information to answer b). BHP Ltd S&P/ASX200 Monthly average return 1.3% 0.17% Standard Deviation 7.87% 4.38% Covariance between BHP and S&P/ASX200 0.0020 b) Compute the following. i) Calculate the correlation coefficient between BHP and S&P/ASX200 and interpret the answer. (2 marks) 11) Calculate the beta of BHP and interpret the answer. (2 marks) iii) Assuming the market risk premium of 6% and the risk-free rate of 1%, compute the required rate of return of BHP Ltd. (2 marks) iv) Assuming the annual average return of 15% for BHP, is BHP underpriced or overpriced? Would you buy or sell BHP shares? (3 marks) v) Draw the Security Market Line using answers you obtained above. Label X-axis, Y-axis and intercept. Clearly present values on X- and Y-axis when you locate the expected and required returns of BHP Ltd in the graph. (4 marks)