Suppose we are given two securities P and Q with the following financial parameters; The return on P = 28% and that on Q = 24.8%. The standard deviation of security P = 25%, that of Q = 50% and that...

Suppose we are given two securities P and Q with the following financial parameters;

The return on P = 28% and that on Q = 24.8%.

The standard deviation of security P = 25%, that of Q = 50% and that of the market = 40%. It is also given that the beta of security P =1.60 and that of stock Y = 1.25.

Based on the financial data given above,

a) Compute the of
 of each security and interpret it;

b) Determine the covariance of each security and the market;

c) Evaluate the covariance of the two securities and interpret it;

d) Calculate the correlation coefficient of the two securities P and Q and interpret it;

e) Decompose the return to each security into its systematic and nonsystematic components;

f) Breakdown the total risk on each security into the systematic and nonsystematic components.