Go to finance.yahoo.com. You should see a quote lookup box on right side. In this box, enter the ticker symbol for Microsoft which is MSFT. Then after the information for the company comes up you will be able to select historical data. This tab will allow you to download historical pricing information. Enter the start date and ending dates January 2, 2017 through January 2, 2018 in the appropriate box. Select daily to get daily data then press apply. Then select to download to spreadsheet which will download the information to an Excel spreadsheet.

Do the same process for NFLX, Netflix. Then again do the same for ^DJI to pull up the data for the Dow Jones Industrial Average which represents the market index.

You want to work with the adjusted closing price column for each of the stocks and stock index. You can copy that one column from NFLX and from the DJI into the Microsoft worksheet, so you can easily copy the equations.

You need the daily returns for all three stock columns. To get these values, you will take the:

(adjusted close for one day adjusted close for the previous day)/adjusted close for the previous day.

For example, (August 16 adjusted closing price August 15 adjusted close)/August 15 adjusted close. Once you have the appropriate equation typed in, you can copy it all the way down the column to create your column of daily returns. Note, you will have one row that does NOT have a calculation in because you dont have the previous days data with which to calculate. Watch the order of the dates when you download the data!

After you have three columns of daily returns calculated, you need the average and standard deviation of each column of data. You can get these value by using Excel functions. Use =average then in parentheses highlight the column of returns, e.g. =average(F2:F254) to find the daily average return. To find the standard deviation, use =stdev.s then in parentheses highlight the column of returns again. You want the annual information. For the annual average return, take your daily average return and multiply by 250 trading days. To get the annual standard deviation, multiply (*) your daily standard deviation by SQRT(250). That is the square root of 250 trading days used to find the annual standard deviation.

There is an online video with examples of these calculations. The video also includes how to calculate beta, but I havent asked you to do that for this assignment.

Compare the average daily returns of each of the stocks. Do the stocks beat the market? Which stock would you prefer based on return?

Compare the total (stand-alone) risk of each of the stocks and the market. Which stock is the least risky?

Calculate the relative risk of each of the stocks and the market. Which has the least relative risk? (Hint: relative risk is the coefficient of variation)