QUESTION FOUR $($a$)$ Omnil Limited sells $200,000$ units of an organic fertilizer product to retail stores. The cost to the company is K$5\mathrm{.}00$ per unit. The cost of processing each order is K$80\mathrm{.}00$ and the carrying cost is K$0\mathrm{.}50$ per unit. Using the Economic Order Quantity model; $($i$)$ What amount should the company order at a time? $(4$ marks$)($ii$)$ What is the average inventory? $(3$ marks$)($iii$)$ How many orders will the company place over the year? $(3$ marks$)($iv$)$ If Omnil Limited adopted the JIT inventory system, what are the risks implicit in this system? $(3$ marks$)($b$)$ Discuss any four factors that a company is likely to consider in determining its dividend policy. $(12$ marks$)$ Total $(25$ marks$)$ QUESTION FIVE

Stocks A and B have the following historical returns.

a$)$ Calculate the average return for each stock during the period $1998$ through $2002.$

$(8$ marks$)$

b$)$ Assume that someone held a portfolio consisting of $50$ percent stock A and $50$ percent stock B$.$ What would have been the realized rate of return on the portfolio in each year from $1998$ through $2002?$ What would have been the average return on the portfolio during this period?

$(9$ marks$)$

c$)$ Calculate the standard deviation of returns for each stock and for the portfolio and explain what each figure mean.

$(8$ marks$)$