Question
Here you will analyze and summarize the performance of your stock portfolio. You will buy your securities at their closing prices on Friday, Sept 8th,
Here you will analyze and summarize the performance of your stock portfolio. You will buy your securities at their closing prices on Friday, Sept 8th, and liquidate at the closing prices on Wednesday, November 8th. You will use the daily adjusted-closing prices on these dates as your purchase and sale prices, respectively. Download the daily adjusted-closing prices from Friday, Sept 8th, to Wednesday, November 8th, for all securities in your portfolio. Do the same for the S&P 500 (ticker: ^GSPC).Exercise 1:a. Calculate your overall portfolio return over the entire holding period. (Remember: your portfolio includes your stocks AND cash). Make sure to account for any stock splits and dividends. An easy way to track your performance is to tabulate the value of each stock (Price * #shares you own) on each day. If there is a split, adjust the number of shares you own. If there is a dividend, move the amount of the dividend (Dividend per share * # shares you own) to your cash on that day. Find the total value of your portfolio plus cash as of the close on the final day, Wednesday, November 8th. From here, you can easily calculate the overall return.Note: You may do this by hand, or in Excel. If you do this by hand, I recommend showing all work, to limit point deductions in the case of mistakes.Exercise 2:a. Calculate your portfolio beta using daily returns and using the S&P 500 to approximate the market return. This will require that you calculate the daily returns of your portfolio. Next, find the alpha of your portfolio over this holding period based on the CAPM model (assume the risk-free rate of return equals 0.15% over this period of roughly 1 month; which equates to a little under 2% per year). To do this, use the given risk-free rate, the S&P return over the same period, and the beta you have calculated. Then find the expected return predicted by the CAPM and compare it to the actual return of your portfolio. The alpha represents your abnormal return over these three months.Note: One way to do this is using regression analysis in Excel as discussed in class, but you may use other methods learned in this/other classes. I recommend using Excel for this, but you can tackle this by hand if you wish.Exercise 3:a. Assume you invested all $150,000 in the S&P 500. How much money would you have ended up with? What would your return have been? Comment on why your portfolio outperformed or underperformed the S&P500. Here you can discuss potential reasons why your particular stocks performed differently than the market as a whole. You should have 1-2 pages of analysis here and should include links to any news article references (should you have them). The news article references do not count towards page length of analysis, and you may include ANY reasons you see fit to describe stock performance.Note: You may do this by hand, or in Excel. If you do this by hand, I recommend showing all work, to limit point deductions in the case of mistakes.
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