Ford and Johnson&Johnson

Go to finance.yahoo.com and download the ending monthly stock prices for Ford $($F$),$ and

Johnson& Johnson $($JNJ$)$ for the specified time period $($TIME PERIOD: January $31,2019$

January $31,2024).$ Use the adjusted closing price, which adjust for dividend payments and stock

splits.

Data: Go to finance.yahoo.com and search for the companies using their ticker symbols $($F and

JNJ$)$ and then click on the $$Historical Data$$ on the menu. Set Time Period as January $31,2019$

January $31,2024,$ choose $$Monthly$$ for frequency and use $$Adj Close$$ prices.

Questions

$1.$ Calculate monthly returns for Ford and Johnson& Johnson for this period.

$2.$ Calculate the average return, variance, and standard deviation of returns for each firm. $($Use

Excel$$s AVERAGE, VAR and STDEV functions.$)$

$3.$ Which stock is riskier if held on its own? Why?

$4.$ Assume that you held an equally weighted portfolio of Ford and Johnson& Johnson $($i$.$e$.,$ a

portfolio with equal dollar investments in each stock$).$ Compute the portfolio$$s rate of return

for each month, and calculate the variance and standard deviation of the portfolio$$s monthly

rate of return.

$5.$ Is the portfolio standard deviation more or less than the average of the standard deviations

of the two component stock?

$6.$ Calculate risk premium for Ford and market risk premium for this period using the monthly

risk$-$free rate $(3-$month Treasury Bill Rate$)$ and monthly S&P $500$ return data provided

$($available on LMS$).$ Estimate the beta for Ford using $$regression$$ function in Excel. Based

on your estimated beta coefficient, comment on Ford$$s systematic risk. Compare your

estimated beta for Ford to the beta provided by finance.yahoo.com. Are they similar?