chapter 5 case study: risk and return

please answer this question parts a,b,c,d,e,f

if you can do it on microsoft excel that will be greatly appreciated. if not, manually will do.

Case: Analyzing Risk and Return on Chargers Products' Investments Junior Sayou, a financial analyst for Chargers Products, a manufacturer of a4 firm is considering adding these assets to its diversified asset portfolio. To Y,T. the return and risk of each asset, Junior gathered data on the annual cash fos and beginning- and end-of-year values of each asset over the immediately pe. ceding 10 years, 1997-2006. These data are summarized in the table beine. Junior's investigation suggests that both assets, on average, will tend to perfots in the future just as they have during the past 10 years. He therefore believes that the expected annual return can be estimated by finding the average annual refin for each asset over the past 10 years: Junior believes that each asset's risk can be assessed in rwo ways: in isolation and as part of the firm's diversified portfolio of assets. The risk of the assets if isolation can be found by using the standard deviation and coefficient of variz tion of returns over the past 10 years. The capital asset pricing model (CAPM) can be used to assess the asset's risk as part of the firm's portfolio of assettApplying some sophisticated quantitative techniques, Junior estimated betas iof assets X and Y of 1.60 and 1.10 , respectively. In addition, he found that the ris. free rate is currently 7% and that the market return is 10%. TO DO a. Calculate the annual rate of return for each asset in each of the 10 precedine years, and use those values to find the average annual return for each asset. over the 10 -year period. b. Use the returns calculated in part a to find (1) the standard deviation and (2) the coefficient of variation of the returns for each asset over the 10-yest period 1997-2006. c. Use your findings in parts a and b to evaluate and discuss the return and nis associated with each asset. Which asset appears to be preferable? Explain. d. Use the CAPM to find the required return for each asset. Compare this value with the a verage annual returns calculated in part a. e. Compare and contrast your findings in parts c and d. What recommendations would you give Junior with regard to investing in either of the two assets? Explain to Junior why he is better off using beta rather than the standard deviation and coefficient of variation to assess the risk of each asset. f. Rework parts d and e under each of the following circumstances: (1) A rise of 1% in inflationary expectations causes the risk-free rate to rise to 8% and the market return to rise to 11%. (2) As a result of favorable political events, investors suddenly become less risk-averse, causing the market return to drop by 1%, to 9%