QUESTION 1 - RISK AND RETURN (28 marks) You are considering investing $150,000 to create a portfolio of two company stocks. The portfolio created will consist of 60% shares in Nature's Flour Mill Ltd and 40% shares in Fun Days Snacks Company Ltd. The price, beta and dividend data for the two companies for the last three (3) years, 2017, 2018 and 2019 are shown in Table 1 below. TABLE 1 Nature's Flour Mill Ltd. Fun Days Snacks Company Ltd. (60%) STOCK PRICE STOCK PRICE Year End of Dividend Beta Dividend Beta Beginning of Year Beginning of Year Year Paid Paid 2017 $20 $25 $1.25 $13 $0.30 2018 $25 $16 $$0.80 $17 $0.33 2019 $16 $22 $1.00 1.4 $22 $0.38 0.6 Answer the following questions: a) Calculate the expected return for each asset over the 3-year period (10 MARKS) b) Estimate the standard deviation for each company's stock (6 marks) c) Calculate the portfolio's expecte turn (4 marks) d) Calculate the portfolio's standard deviation (6 marks) e) Assume in 2019, the estimated rate of return of the T&T Stock Exchange Composite Index was 6%, and the estimated rate of return on a 1 year treasury note for the upcoming year was 2%. Using the 2019 beta of each security and the market expected returns calculate an expected rate of return for each security (2 marks)