1a and b) Choose GSK and Sainsbury

1c and d) Choose Sainsbury - GSK Portfolio

USE FAME DATABASE TO GET ANSWERS!!!!!!

Please read the instructions carefully. The following questions are related to the following risky securities issued by: Sainsbury: J Sainsbury PLC (Reg. no: 00185647). The holding company whose subsidiaries engaged in the food, general merchandise and clothing retailing, and financial services activities in the United Kingdom. BAT: British American Tobacco PLC (Reg. no: 03407696). The holding company owns, directly or indirectly, investments in the numerous companies constituting the British American Tobacco Group activities include the manufacture, distribution or sale of tobacco and nicotine products. GSK: Glaxosmithkline PLC (Reg. no: 03888792). It manufactures various pharmaceutical products. (Source: FAME) Required: Choose from the above three, two securities of interest to you to address the following questions: a) Calculate the monthly rates of return for each of the chosen securities Your calculation should be using the monthly closing stock prices from December 2012 to December 2019 published in FAME (Financial Analysis Made Easy) database. The figures in FAME have been adjusted based on the stock split/dividend ratio. (Note: Students are required to learn how to use FAME database to extract the required financial information). You can use Microsoft Excel functions to expedite your calculation, but please show the mathematical formula used. Please show rates of return up to three digits after decimal point. For example, 0.000 instead of 0.000%. (8 marks) b) Based on your calculation in (a), calculate for each of the chosen securities: i. Average monthly rate of return (Note: Assume each monthly return has equal chance to occur). ii. Standard deviation of the monthly rates of return in the sample. (You can use Microsoft Excel functions to expedite your calculation. Please show answers up to three digits after decimal point) (4 marks) 2 of 7 c) Calculate the weighted average rate of return and standard deviation of returns for the portfolio containing the combination of your two chosen securities in varying weights as indicated below. Then, choose a recommended portfolio. Summarize your answers in the following table. For example, for Sainsbury - BAT portfolio: Weight Weighted Standard Recommended Portfolio Sainsbury BAT average rate deviation of portfolio of return returns (please tick v only one) 1 0.0 1.0 2 0.1 0.9 3 0.2 0.8 4 0.3 0.7 5 0.4 0.6 6 0.5 0.5 7 0.6 0.4 8 0.7 0.3 9 0.8 0.2 10 0.9 0.1 11 1.0 0.0 (Note: You can use Microsoft Excel functions to expedite your calculations. Please show answers up to three digits after decimal point) (4 marks) d) For each of the portfolios in (c) above, plot the portfolio risk-return for different weights of assets (Note: For the risk-return plots, return is on vertical axis and risk is on horizontal axis). Discuss what do you learn from this analysis. (4 markslt Please read the instructions carefully. The following questions are related to the following risky securities issued by: Sainsbury: J Sainsbury PLC (Reg. no: 00185647). The holding company whose subsidiaries engaged in the food, general merchandise and clothing retailing, and financial services activities in the United Kingdom. BAT: British American Tobacco PLC (Reg. no: 03407696). The holding company owns, directly or indirectly, investments in the numerous companies constituting the British American Tobacco Group activities include the manufacture, distribution or sale of tobacco and nicotine products. GSK: Glaxosmithkline PLC (Reg. no: 03888792). It manufactures various pharmaceutical products. (Source: FAME) Required: Choose from the above three, two securities of interest to you to address the following questions: a) Calculate the monthly rates of return for each of the chosen securities Your calculation should be using the monthly closing stock prices from December 2012 to December 2019 published in FAME (Financial Analysis Made Easy) database. The figures in FAME have been adjusted based on the stock split/dividend ratio. (Note: Students are required to learn how to use FAME database to extract the required financial information). You can use Microsoft Excel functions to expedite your calculation, but please show the mathematical formula used. Please show rates of return up to three digits after decimal point. For example, 0.000 instead of 0.000%. (8 marks) b) Based on your calculation in (a), calculate for each of the chosen securities: i. Average monthly rate of return (Note: Assume each monthly return has equal chance to occur). ii. Standard deviation of the monthly rates of return in the sample. (You can use Microsoft Excel functions to expedite your calculation. Please show answers up to three digits after decimal point) (4 marks) 2 of 7 c) Calculate the weighted average rate of return and standard deviation of returns for the portfolio containing the combination of your two chosen securities in varying weights as indicated below. Then, choose a recommended portfolio. Summarize your answers in the following table. For example, for Sainsbury - BAT portfolio: Weight Weighted Standard Recommended Portfolio Sainsbury BAT average rate deviation of portfolio of return returns (please tick v only one) 1 0.0 1.0 2 0.1 0.9 3 0.2 0.8 4 0.3 0.7 5 0.4 0.6 6 0.5 0.5 7 0.6 0.4 8 0.7 0.3 9 0.8 0.2 10 0.9 0.1 11 1.0 0.0 (Note: You can use Microsoft Excel functions to expedite your calculations. Please show answers up to three digits after decimal point) (4 marks) d) For each of the portfolios in (c) above, plot the portfolio risk-return for different weights of assets (Note: For the risk-return plots, return is on vertical axis and risk is on horizontal axis). Discuss what do you learn from this analysis. (4 markslt