Use the weekly historical prices of four companies, Santos (STO), Rio Tinto (RIO), Qantas (QAN) and Crown Resorts (CWN), and of the All-Ordinaries index from the unit site for the Jan 2018 -Dec 2019 and April 2020-Jun2021 periods, and ignore dividend payments in these periods to answer the following questions:
Question 1: As equal weighting scheme may not give the optimal portfolio, calculate the optimal weight of the two assets recommended in part d. that would further minimise the risk of the portfolio in both periods, the Jan 2018 -Dec 2019 and April 2020-Jun 2021. What is the expected return and risk of the portfolio based on this optimal weight? (5 marks)
Question 2 : . Crown Resorts has been found not suitable to hold casino licences in some states in Australia in the recent royal commission report. Briefly highlight the misconducts detailed in the royal commission report that leads to a serious agency problem between the management and shareholders of the company. What type of risk the company is facing because of the Royal Commission findings? What possible actions should shareholders take to alleviate this problem in the future? (5 marks)
I shared stock data with you on Google Drive, pls check it !!!