Richmond Business SchooI FNN 5200 Corporate Finance Assignment Three Modern Portfolio Theory All questions valued equally 1. The following data encapsulates historic data on shares in Pariah plc and...

Extracted text: Richmond Business SchooI FNN 5200 Corporate Finance Assignment Three Modern Portfolio Theory All questions valued equally 1. The following data encapsulates historic data on shares in Pariah plc and Asylum plc: "State of the world" Ps Return on Pariah Return on Asylum (s) 0.15 -0.05 -0.07 1. 0.35 0.05 0.05 0.3 0.07 0.10 3 0.2 0.10 0.12 (a) What is the expected return and risk (measured by standard deviation) of each of these securities? (b) What is the covariance and correlation coefficient between the returns on these two securities? (c) Would you recommend investment in a portfolio of (only) these two assets, with Asylum plc accounting for three-quarters of the total portfolio? Explain fully.