Question 1:
Discuss and explain the significance of diversification in context of stock markets using appropriate numerical illustrations.
Question 2:
Mimine and Minush are two companies with the following dividend and market price per share (MP) for period 2000-2005
i. Compute the average return and risk for the above shares. Demonstrate clearly your calculation. Interprete your results.
ii. Compute the portfolio return if an investor decides to make a portfolio with equal weight.
iii. If the correlation coefficient is -0.5 compute the portfolio risk. Comment on your answer.
Question 3:
Make a distinction between systematic and unsystematic risk.