Fin2014 Financial Management|Risk And Return Assessment Answer

The report should include the following: 1) Risk and Return: Obtain ▪ the monthly closing share prices of your chosen company (eg: Company A) which you have reserved as your first asset; and ▪ the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) for the period from August 2019 to August 2020. a) Calculate the average monthly returns for the chosen company (eg: Company A) and the FBM KLCI respectively. b) Calculate the standard deviation of the monthly returns for the chosen company (eg: Company A) and the standard deviation of FBM KLCI respectively. c) Calculate both the covariance and correlation between the monthly returns of the chosen company (eg: Company A) with the market. d) Comment on your answers in part 1(a), 1(b) and 1(c), and briefly justify your choice of investment in the chosen company (eg: Company A) based on the calculations above. e) Analyse the implications of the recent outbreak of COVID-19 on your chosen company’s share prices. Discuss how your chosen firm and its share price performances could have been affected by the implementation of multiple phrases of lockdown in the country involving: Movement Control Order (MCO), Conditional Movement Control Order (CMCO) and Recovery Movement Control Order (RMCO), directly or indirectly in the recent months. 2) Capital Asset Pricing Model (CAPM): (10 marks) a) Calculate the beta to measure the market risk for your chosen company and provide comment. b) Determine the risk-free rate and calculate the required rate of return for the chosen company using the Capital Assets Pricing Model. Comment on your answers.