Section B (Total: 30 marks) Question 1 Newton Stable Income Fund starts the year with Net Asset Value (NAV) of MYR 1.2250 per unit. By the year-end, Newton Stable Income Fund portfolio has the following composition of stocks as shown in the table below: Stock Number of Shares Price per Share (Units) (MYR) 8.50 A 200,000 B 300,000 20.50 C 500,000 8.20 D 600,000 2.50 The fund has 1.5 percent expense ratio. Currently, there are 10 million shares outstanding. The fund investment objective stated in the fund fact sheet was to outperform the KLCI benchmark. In the same year, the KLCI Index started at 1,580 points and closed at the current level of 1,650 points. Required: (a) Suppose that the standard deviation for Newton Stable Income Fund and KLCI is calculated as 12% and 8%, respectively. The estimated beta for Newton Stable Income Fund is 1.3 and the current 3-month T-Bill rate is 2.5%. Evaluate the performance of Newton Stable Income Fund using Sharpe ratio. (8 marks) (b) What type(s) of stock most likely are Stock A, B, C, and D? Explain your rationales. (8 marks) (c) Recommend additional TWO (2) asset classes to be invested besides stock in the Fund's portfolio. Justify your rationales in terms of the portfolio risk and returns. (14 marks) Section B (Total: 30 marks) Question 1 Newton Stable Income Fund starts the year with Net Asset Value (NAV) of MYR 1.2250 per unit. By the year-end, Newton Stable Income Fund portfolio has the following composition of stocks as shown in the table below: Stock Number of Shares Price per Share (Units) (MYR) 8.50 A 200,000 B 300,000 20.50 C 500,000 8.20 D 600,000 2.50 The fund has 1.5 percent expense ratio. Currently, there are 10 million shares outstanding. The fund investment objective stated in the fund fact sheet was to outperform the KLCI benchmark. In the same year, the KLCI Index started at 1,580 points and closed at the current level of 1,650 points. Required: (a) Suppose that the standard deviation for Newton Stable Income Fund and KLCI is calculated as 12% and 8%, respectively. The estimated beta for Newton Stable Income Fund is 1.3 and the current 3-month T-Bill rate is 2.5%. Evaluate the performance of Newton Stable Income Fund using Sharpe ratio. (8 marks) (b) What type(s) of stock most likely are Stock A, B, C, and D? Explain your rationales. (8 marks) (c) Recommend additional TWO (2) asset classes to be invested besides stock in the Fund's portfolio. Justify your rationales in terms of the portfolio risk and returns. (14 marks)