QUESTION 2 Aisyah, a new investor cannot decide whether to invest in Stock Media Prima or Stock Astro, or in a portfolio which is a combination of both stocks. She has approached RHB securities and...

c) Calculate the covariance for the above stock.
d) Is the combination of the above stock can be considered as an optimum diversification?
Justify your answer.

Extracted text: QUESTION 2 Aisyah, a new investor cannot decide whether to invest in Stock Media Prima or Stock Astro, or in a portfolio which is a combination of both stocks. She has approached RHB securities and the firm has provided her with the following information. Probability (%) Expected return (%) Stock Media Prima Stock Astro 30 13 15 20 14 13 20 15 12 30 16 11 Using these stocks, she has identified two investment portfolio alternatives: Alternatives Portfolio 1 100% Stock Media Prima 2 40% of Media Prima and 60% of Astro