Question: Question 4 (10 marks) The following two charts plot the performance of the FIN 223 portfolio from March 2022 to mid-May 2022. The charts also

Question 4 (10 marks) The following two charts plot the performance

Question 4 (10 marks) The following two charts plot the performance of the FIN 223 portfolio from March 2022 to mid-May 2022. The charts also present the returns of the ASX200 stock index, which represents the market portfolio. The first chart shows the cumulative return on the two portfolios. The second chart shows a scatterplot of daily returns of the FIN 223 portfolio versus the ASX200 portfolio. The FIN 223 portfolio is a diversified portfolio containing 48 different stocks that are listed on the Australian Securities Exchange. Using your knowledge of portfolio theory, the CAPM and the information contained in the charts below: a) Discuss the risk of the FIN 223 portfolio. (5 marks) b) Discuss the performance of the FIN 223 portfolio relative to the ASX200 portfolio. (5 marks) Chart 1: Cumulative Daily Returns 16.0% FIN 223 ASX200 14.0% - 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% 01/03 15/03 01/04 15/04 01/05 15/05 Date Chart 2: Scatterplot of Daily Returns of FIN 223 vs ASX200 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% Cumulative Return (%) FIN 223 Portfolio Return ASX200 Return Question 4 (10 marks) The following two charts plot the performance of the FIN 223 portfolio from March 2022 to mid-May 2022. The charts also present the returns of the ASX200 stock index, which represents the market portfolio. The first chart shows the cumulative return on the two portfolios. The second chart shows a scatterplot of daily returns of the FIN 223 portfolio versus the ASX200 portfolio. The FIN 223 portfolio is a diversified portfolio containing 48 different stocks that are listed on the Australian Securities Exchange. Using your knowledge of portfolio theory, the CAPM and the information contained in the charts below: a) Discuss the risk of the FIN 223 portfolio. (5 marks) b) Discuss the performance of the FIN 223 portfolio relative to the ASX200 portfolio. (5 marks) Chart 1: Cumulative Daily Returns 16.0% FIN 223 ASX200 14.0% - 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% 01/03 15/03 01/04 15/04 01/05 15/05 Date Chart 2: Scatterplot of Daily Returns of FIN 223 vs ASX200 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% Cumulative Return (%) FIN 223 Portfolio Return ASX200 Return

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