Table 1: ANNUAL RETURNS (%) Lyx Malaysia Lyx Singapore Lyx

Table 1: ANNUAL RETURNS (%)

Table 2: PORTFOLIO WEIGHTS (%)

Questions:

1. Using the given information in Table 1, calculate the mean return, standard deviation, covariance and correlation for the given stocks.

2. Calculate the return and standard deviation for the portfolio consisting of the two stocks.

3. After adding the stock Lyx USDJIA, what is the portfolio return and standard deviation? How does the new portfolio differ from the first portfolio calculate in question 2?

4. Basedonyouranalysis,explainshouldAlbertdiversifyhisportfolioorremain invested in Malaysia and Singapore only?

5. Calculate beta for the current portfolio and the new portfolio. Assuming a risk free rate of 2.5% and a market risk premium of 5.5% and calculate the expected return for both portfolios.