Question 5 Risk and Return PASS Ltd., is a publicly listed Australian company that your client is following closely. The historical price of PASS Ltd. is given below. Australian Treasury bills currently pay a return of 4% p.a., the stock market return over the same period averaged 10% p.a., and have calculated the standard deviation of the market returns to be 12% p.a. PASS Ltd. beta is estimated at 1.40. Lastly, you have identified the historical returns and dividends (below). Year Price Dividend 1 2 $0.30 3 4 $0.35 $3.60 $3.25 $3.65 $4.50 $4.45 $4.68 $5.21 $6.01 5 6 $0.45 7 8 $0.50 Using the above information, identify whether it is a good idea, for your client, to invest in PASS. Explain your reasoning for your decision in relation to expected rate of return, required rate of return, and standard deviation Question 5 Risk and Return PASS Ltd., is a publicly listed Australian company that your client is following closely. The historical price of PASS Ltd. is given below. Australian Treasury bills currently pay a return of 4% p.a., the stock market return over the same period averaged 10% p.a., and have calculated the standard deviation of the market returns to be 12% p.a. PASS Ltd. beta is estimated at 1.40. Lastly, you have identified the historical returns and dividends (below). Year Price Dividend 1 2 $0.30 3 4 $0.35 $3.60 $3.25 $3.65 $4.50 $4.45 $4.68 $5.21 $6.01 5 6 $0.45 7 8 $0.50 Using the above information, identify whether it is a good idea, for your client, to invest in PASS. Explain your reasoning for your decision in relation to expected rate of return, required rate of return, and standard deviation