MINICASE 1

You need to show your working notes in excel for credit. You must submit your work using excel files (with .xls or .xlsx for credit).

This assignment will require you to analyze time series of monthly returns. Start by retrieving MONTHLY data for the period of 01/01/2015 08/31/2018 from Yahoo website for

S&P 500 Index (ticker: ^GSPC) General Electric Company (ticker: GE) Intel Corporation (ticker: INTC) Chevron Corporation (ticker: CVX) Apple Inc. (ticker: AAPL)

Instructions for downloading the data from Yahoo! Website (https://finance.yahoo.com/): To obtain the monthly data for each company, on Yahoo! Finance website, enter the ticker symbol under Quote Lookup. Then, click on Historical Data. Enter Time Period as given above. For Frequency, make sure Monthly is selected and then click on Apply. Click on Download Data.

Saving your final file:

Keep only Date and Adj Close columns for each company. Put all five sets of data in one excel file to do further analysis.

Very important: Save your final file as a .xls or .xlsx file before you start the computations. Comma delimited (.csv) files do not retain the formulae and cell references after closing the file. You will receive a grade of zero if your file does not contain cell references and formulae that show how you arrived at the various answers.

Calculating Returns:

Use the Adj Close column to obtain returns for each period. Remember that the Adjusted Close column has already adjusted the prices for dividends and stock splits so you do not have to adjust for it again. Just use the adjusted close column to obtain the return R for each month t as: Rt = Adj Closet/Adj Closet-1 1

Solve for the following:

What is the average monthly return and standard deviation of returns for the 01/01/2015 8/31/2018 period for

(i) S&P 500

(ii) GE

(iii) Intel

(iv) Chevron

(v) Apple

(vi) Comment on your findings

Calculate the correlation between:

(i) GE and Intel

(ii) GE and Chevron

(iii) GE and Apple

(iv) Intel and Chevron

(v) Intel and Apple

(vi) Chevron and Apple

(vii) Comment on your findings

Calculate the stock betas for the 01/01/2015 8/31/2018 period for:

(i) GE

(ii) Intel

(iii) Chevron

(iv) Apple

(v) Comment on your findings.

If you were to form a portfolio that was equally invested in GE, Intel, and Chevron, what would be the average return and the standard deviation of returns for your portfolio?

If you were to add Apple to your portfolio so that the portfolio was equally invested in GE, Intel, Chevron, and Apple, what would be the new average return and standard deviation of returns for your portfolio? Is Apple a good addition to your portfolio? Why do you think so?