distributed? Hint: Comment on the distribution by observing the moments of the distribution and support your argument with the skewness and kurtosis figures.

D. Form several portfolios assuming the following randomly assigned weights and compute their respective portfolio return and portfolio standard deviation.

Portfolio Theory Assignment

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E. Plot the portfolio returns against the standard deviations you found above in (D) in a scatter plot.

F. Now use the rule for deriving the efficient frontier to find the efficient counterpart of the 7 portfolios in (D). Assume no short selling is allowed. Now fill in the missing values of the table below with the efficient portfolios.

G. Now plot the efficient set of portfolio returns against their standard deviation from (F) in the same scatter plot constructed in (E). What do you observe? Explain what you find in a sentence.

H. Construct a correlation matrix using the correlation tool in excel under Tools-Data Analysis for the four stocks under analysis.

I. You are now going to use the utility function to maximize the utility of two investors - one with a risk aversion rating of 3 (Less Risk Averse investor) and one with a risk aversion rating of 7 (More Risk Averse investor) given the four stocks available. Assume no short-selling, find the maximum utility that can be derived by these two investors. summarize the information your find in the following table:

p

Eve 7

J. Now find the maximum utility assuming the two investors can shor