Closing prices for SilTech and New Mines for the years 19972012 are shown below. a. Calculate the

Question:

Closing prices for SilTech and New Mines for the years 1997€”2012 are shown below.
a. Calculate the total returns for each stock for the years 2012€”1998 to 3 decimal places. Note that the price for 1997 is used to calculate the total return for 1998.
b. Assume that similar returns will continue in the future (i.e., average returns = expected returns). Calculate the expected return, variance and standard deviation for both and insert these values in the spreadsheet. Use Average, Var, and Stdev functions.
c. Calculate the covariance between these two based on the 15 years of returns.
d. Using the 11 different proportions that SilTech could constitute of the ranging from 0% to 100% in 10% increments, calculate the variance, standard deviation and expected return.
e. Plot the tradeoff between return and risk for these two based on the calculation in (d). Use the XY scatter diagram in Excel.

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