1.1 What is the correlation between the stock market returns (column N) and the dollar returns (column Q) over - Jan 1990 Dec 2020 (full sample), - Jan 2008 - Dec 2009 (crisis), - Jan 2010 - Dec 2015 (post-crisis), - Jan 2016 Dec 2020.

Compare these numbers with each other. Write your thoughts about the recent correlation between the stock market and the dollar.

1.2 Plot the two cumulative return series (indexes in column M and P) on two different plots and describe the behavior of the U.S. stock prices relative to the dollar in the last 20 years. (1) What were the time periods when the two moved in the same direction? (2) What were the time periods when the two moved in the opposite directions? 1.3 Industry stock market exposure to the fluctuations in the dollar is a coefficient from regressing stock market returns on the dollar returns. Mathematically, you can find this exposure coefficient (beta) by applying the following formula: = (,) ()

(1) Compute the dollar exposure coefficients for all industries (over 1990-2020) use data in columns B-K and dollar return in column Q. Input 10 numbers. Hint 1: the number for the first industry is -0.34. Hint 2: As for using Excel to compute betas, you might find the following video helpful (the third way in the video uses the above formula). (2) Which industry has the largest and the lowest exposure to the dollar (by absolute value)? How would you interpret these two numbers? Hint: You might find this interesting. 1.4 (1) Compute market betas for each industry, i.e. industry stock market exposures to the aggregate stock market (over 1990-2020) use data in columns B-K and market excess returns in column N. Use the formula for beta from 1.3, but replace DollarReturn with the stock market excess return. Input 10 numbers. Hint: the number for the first industry is 0.64. (2) Which industry portfolio has the highest and the lowest stock market beta? Compare stock market beta of this industry to its dollar exposure.