Your supervisor has requested that you consider Cronox Industries or Zealous Incorporated. For the period 2016 2021, the share prices and dividends of the two companies, as well as the returns on the Ghana Stock Exchange, are shown below.

	Cronox Industries		Zealous Incorporated
Year	Stock price	Dividend (GH)	Stock price	Dividend (GH)	GSE Returns (Market Returns)
2016	7.62	-	55.75	-	-
2017	12	0.90	60.00	2.25	0.07
2018	10.75	0.95	57.25	2.50	0.12
2019	17	1.00	48.75	2.75	0.08
2020	15.75	1.06	52.30	2.90	0.23
2021	17.25	1.15	48.75	3.00	0.18

1. Calculate the covariance and the correlation coefficient between the two stocks
2. Assuming your supervisor wants to invest the same amount in each of the stocks, what will be his portfolio risk and portfolio return
3. Compute the beta for both Cronox and Zealous
4. Which stock has the most systematic risk? Which one has the most unsystematic risk? Which stock is riskier? Explain.
5. Based on your knowledge of the market beta, do you think your supervisor will be adequately compensated for the level of risk he is willing to assume?
6. Assuming the risk-free rate is 5%, what is the expected rate of return using the CAPM?