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Consider the instructions below and find the weights for Microsoft and Tesla stock in the optimal risky portfolio. As your answer, submit Microsoft. Enter your
Consider the instructions below and find the weights for Microsoft and Tesla stock in the optimal risky portfolio. As your answer, submit Microsoft. Enter your answer as a decimal number up to four digits. For example, if you find then enter When we diversify with only two assets, then it is fairly easy to write down how much weight we need to put into each asset. When there are more than two assets, the equations are more cumbersome, and we have to turn to numerical tools to find the efficient frontier. To prepare ourselves for this, we are going to explore the Excel Solver tool to determine the opportunity set of a portfolio of two stocks. Follow these instructions: Download the daily adjusted closing prices during the time from January to December for the following two stocks: Microsoft $MSFT and Tesla $TSLA Compute the daily returns using the ordinary return. Estimate the standard deviation of the daily returns of each of the stocks. Compute the covariance matrix and the correlation matrix. Both should have two rows and two columns. Use the following forecasts for the annual returns of each stock and the riskfree rate: @ @ @ Make sure your Excel table contains the following fields: weight of Microsoft, weight of Tesla, sum of these two weights, expected return of the portfolio with the weights, variance, standard deviation and Sharpe ratio. Using the Solver tool, which is an Excel addon apply the following: of
Consider the instructions below and find the weights for Microsoft and Tesla stock in the optimal risky portfolio. As your answer, submit Microsoft. Enter your answer as a decimal number up to four digits. For example, if you find then enter
When we diversify with only two assets, then it is fairly easy to write down how much weight we need to put into each asset. When there are more than two assets, the equations are more cumbersome, and we have to turn to numerical tools to find the efficient frontier.
To prepare ourselves for this, we are going to explore the Excel Solver tool to determine the opportunity set of a portfolio of two stocks. Follow these instructions:
Download the daily adjusted closing prices during the time from January to December for the following two stocks: Microsoft $MSFT and Tesla $TSLA
Compute the daily returns using the ordinary return.
Estimate the standard deviation of the daily returns of each of the stocks.
Compute the covariance matrix and the correlation matrix. Both should have two rows and two columns.
Use the following forecasts for the annual returns of each stock and the riskfree rate:
@
@
@
Make sure your Excel table contains the following fields: weight of Microsoft, weight of Tesla, sum of these two weights, expected return of the portfolio with the weights, variance, standard deviation and Sharpe ratio.
Using the Solver tool, which is an Excel addon apply the following:
of
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