Question 1)

a. Explain the assertion that the relationship between the standard deviation on a portfolio and standard deviations of the assets in the portfolio is not a simple one.

(5 marks)

b. Briefly discuss the concept of the Security Market Line (SML), and explain why all assets must plot

directly on it in a competitive market.

(5 marks)

c. The dividend debate is inconclusive and still on-going in the corporate world. In your view, briefly

discuss some real world factors that may support the payment of high and low dividends