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(a)Consider a portfolio of four stocks as displayed in the following table:

By March 4, 2022No Comments

(a)Consider a portfolio of four stocks as displayed in the following table:StockWeightBetaMastulin0.11.3Masjati0.2-0.6Masasli03BxMaspadu0.41.1Assume the expected return of the portfolio is 0.12,the annual effective risk-freerate is 0.06,and the market risk premium is 0.08.Assuming the Capital AssetPricing Model (CAPM)holds,calculate Bx[9 marks](b)Seri Iskandar Corporation’s common stock is currently selling for RM40 per shareand there are 1.000.000 shares and 20,000 bonds outstanding,which are sellingat 107 percent of par.If the firm was considering an active change to theircapital structure so that the firm would have a debt to equity ratio of 1.5,whichtype of security (stocks or bonds)would they need to sell to accomplish this,andhow much would they have to sell?[8 marks](c)How can standard deviation.a statistical measure of dispersion,be used ininvestment analysis?[3 marks]

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