Each Question is to be done a SEPARATE excel sheet. Be sure to show all necessary formula in cells.

Question $1$

Using the "Assignment$6.$xls$"$ Microsoft Excel file. The file contains two spreadsheets. Use the data in

Spreadsheet "Stocks".

In this spreadsheet you will find the price of $3$ stocks $-$ these are data from the NYSE.

a$)$ For each stock compute the rate of return $r=ln(\frac{P_{i,t}}{P_{i,t-1}})$ where $P_{i,t}$ is the price of stock $i$ at time $t.$ Be

sure to place the stock prices in the correct order to calculate the returns. $(4$ marks$)$

b$)$ Compute the mean and standard deviation for the stock returns of each asset using the formula. Comment

on your results. $(6$ marks$)$ Where mean is the average $r_{(avg)}$ and the standard deviation is$.$

$\sqrt[\phantom{2}]{?}({\displaystyle \underset{?}{\overset{?}{}}}(\frac{(r-r_{(avg)}^2)}{n-1})).$

c$)$ Assume you would like to invest in a portfolio composed by the $3$ assets in the spreadsheet. Further assume

that you would like to invest the same amount of money in each asset. Compute the expected return and

the risk of your portfolio. Comment on your results. $(10$ marks$)$