Risk and return estimates (4 marks): a. Use CAPM to estimate the expected return for the shares of: i) your case company; and ii) a hypothetical company with a beta of 1.60. To do this, use the yield to maturity of a 10-year Australian Government bond on 1 April 2020 as a proxy for the risk-free rate, assume the market risk premium is 5.50% and use your case companys most recent 5-year beta. b. Using the data from part 2a, estimate portfolio expected return and beta, assuming a portfolio with 70% invested in your case company and the remainder invested in the hypothetical company.

Answers to the above two questions are already completed. below are the answers and the required data to complete question 3.

_i = 0.79 (Give most recent 5year beta based on S&P Capital)

hypothetical company _i = 1.60

R_f = 0.68% (As of 1^st April 2020)

2 a) Expected return company (BRG) share = = 5.02%

Expected return hypothetical company share = 9.48%

2 b) Expected portfolio return = 6.36%

Portfolio Beta = 1.03

Question 3) Drawing on expectations from theory and incorporating the overall context of your chosen company, interpret and discuss the risk and return measures from parts 2a and 2b. Company name -Breville Group Limited (ASX:BRG)

The following points need to be discussed in question 3

1) Portfolio benefits relates to the beta. eg. risk reduction and insurance against market movements

2) Types of risks (Systematic vs unsystematci risks)

3) Provide detailed interpretation of beta. Perhaps include a quantitative example that demonstrates how the beta changes relative to the market change.

4) Discussion between portfolio vs individual stock values.

ASX:BRG - Share Pricing 15/04/2019 27/05/2019 10/06/2019 24/06/2019 22/07/2019 2/09/2019 16/09/2019 28/10/2019 1/11/2019 13/12/2019 8/07/2019 29/04/2019 13/05/2019 5/08/2019 19/08/2019 no 0/09/2019 14/10/2019 ASX:BRG - Share...n 25/11/2019 9/12/2019 Figure 2: One year return of Breville (BRG) (Source: S&P Capital IQ, 2020) 06/01/2020 20/01/2020 3/02/2020 17/02/2020 2/03/2020 16/03/2020 30/03/2020 13/04/2020 ASX:BRG - Volume 2m 2m 1m 800,000 600,000 400,000 200,000 Apr- May- Jun-Jul-17- Aug Sep Oct Nov Dec- Jan Feb Mar Apr- 15- 17 - 18 - 201915- 13- 14- 12- 11 - 14- 13- 13- 15- 2019 2019 2019 2019 2019 2019 2019 2019 2020 2020 2020 2020 Figure 3: Volume Traded (Source: S&P Capital IQ, 2020) ASX:BRG - Share Pricing 15/04/2019 27/05/2019 10/06/2019 24/06/2019 22/07/2019 2/09/2019 16/09/2019 28/10/2019 1/11/2019 13/12/2019 8/07/2019 29/04/2019 13/05/2019 5/08/2019 19/08/2019 no 0/09/2019 14/10/2019 ASX:BRG - Share...n 25/11/2019 9/12/2019 Figure 2: One year return of Breville (BRG) (Source: S&P Capital IQ, 2020) 06/01/2020 20/01/2020 3/02/2020 17/02/2020 2/03/2020 16/03/2020 30/03/2020 13/04/2020 ASX:BRG - Volume 2m 2m 1m 800,000 600,000 400,000 200,000 Apr- May- Jun-Jul-17- Aug Sep Oct Nov Dec- Jan Feb Mar Apr- 15- 17 - 18 - 201915- 13- 14- 12- 11 - 14- 13- 13- 15- 2019 2019 2019 2019 2019 2019 2019 2019 2020 2020 2020 2020 Figure 3: Volume Traded (Source: S&P Capital IQ, 2020)