1. (2 marks) Provide a discussion on the similarities and differences of two companies: China Petroleum & Chemical and Alibaba. Minimum four key points for full marks. Hints: students may consider

the following when attempting this question. • What services/products each company offers? • Which industry the company operates in? • Where their stocks are listed? • Where the company is found? Do not forget to cite the source of information. Referencing (Chicago 17B referencing) is mandatory. 2. (8 marks) Calculate the return and risk (standard deviation) of each stock. 3. (2 marks) Explain the relation (positive or negative) between risk and return based on your answers in the previous question. 4. (4 marks) Calculate the correlation coefficient between (1) Amazon and Alibaba, and (2) Amazon and China Petroleum & Chemical. 5. (3 marks) Calculate the expected (annual) return and standard deviation if you owned a portfolio consisting of 50% in Amazon and 50% in Alibaba. 6. (3 marks) Calculate the expected (annual) return and standard deviation if you owned a portfolio consisting of 80% in Amazon and 20% in China Petroleum. 7. (3 marks) Compare the portfolios in parts 5 or 6. Which portfolio (parts 5 or 6) provides better diversification? Define diversification and explain your answer(s).