TYBAF /TYBBI. Security Analysis & Portfolio Management Part 7 Prof Shezad Lalani (M.com,GDCA,ACMA, PGDFM, SET, CS inter) 7 Given below are the likely returns in case of shares of Sun Ltd. and Moon Ltd. in the various economic conditions. Economic Probability Return (%) ] Condition Sun Lid. Moon Ltd. | High Growth 03 “15% 10% Low Growth 0.4 13% 11% Stagnation 02 9% 12% Recession 0.1 6% 14% (a) Calculate the expected rate of return and standard deviation of return on stock of Sun Ltd. and Moon Ltd. (b) If you could invest in either stock of Sun Ltd or Moon Ltd. but not in both which stock would you prefer?2 LY Mr. Ram wants to invest in company A or company B. The Teturn on stock of company A and B and probabilities are given below: Company A Company B Return Probability” | Retum | Probability (%) (%) ~~) A) 6 0.10 4 04 7 0.25 6 0.2 8 0.30 8 04 . 9 0.25 10 0.2 ; 10 0.10 2 01 Calculate expected return and standard deviation of both company and advise Mr. Ram, whether he should invest in company A or B.3 From the following information calculate co-variance of a security with market. Year Return on Return on Market Security (%) Portfolio (%) 10 12 11 14 12 i 12 15 10 8