Question: Question 2 10 points Save Answer (Your results should be at least up to 4 decimal places) Question 2 a. An investor invested 65% of

Question 2 10 points Save Answer (Your results should be at least up to 4 decimal places) Question 2 a. An investor invested 65% of his money in stock A and 35% in stock B and constructed a portfolio. The return data for both stock A and B are given below: Year Return on stock A (%) Return on stock B (%) Weight=0.65 Weight=0.35 2009 0.52 1.65 2010 5.21 2.15 2011 7.23 0.25 2012 1.22 5.32 2013 3.22 3.12 2014 -0.25 1.25 i. Calculate the correlation coefficient between Stock A and Stock B. (1 mark) ii. Calculate the portfolio standard deviation using the above data. (3 marks) ili. Will this portfolio selection reduce the risk efficiently? Please explain. (0.5+2.5=3 marks) b ) According to the capital asset pricing model the expected return on shares in the Gamma Corporation is 10.6%. The beta value associated with these shares is 0.95 and the risk free rate of interest is 4%. Given this information, calculate the market risk premium and the expected return on the market portfolio? (3 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac) BIUS Paragraph v Open Sans,S... v 10pt Ev Ev A v & v EE X X2 + EXE (:)

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